Impact Of Corporate Actions On Options Market

Abstract

The economic development of a nation is a basis for the existence of a well-organized financial system, which is the indicator of the health of the economy. Financial system may be viewed as a structure consisting of financial institutions, financial instruments, financial services, and financial markets. Capital market is one of the components that build an economy. Capital market is influenced by corporate actions. This study focused on imapct of corporate actions on option contract price of the companies. The study collected options price of selected companies on the day of corporate actions. The results concluded that options price of Ambuja cements and Indian Oil Corporation impact the option premium settlement on the day of corporate actions significantly and the other variables – Bharat Electronics Limited, CRISIL, GAIL, India Bulls, India Nippon, KPR Mills, Marathon, and Tata Steel - do not impact the option premium settlement significantly.