Split Adjusted

Split Adjusted

A modification made to a security's price that takes into consideration the effect of a split on the total number of shares or units outstanding, in order to compare the security's current price to its historical price in a consistent form of valuation. In order to adjust a security's price, the post split price would be multiplied by the split ratio (or ratios if multiple splits had occurred) in order to get a split-adjusted price. While stock prices most often are referred to as split-adjusted, options on underlying split stocks are also split-adjusted by increasing the number of shares covered by the terms of the option. This conversion is done by the same split ratio as the underlying shares, and the strike price is divided by the split ratio.

Stock Replacement Strategy

Stock Replacement Strategy

An investment strategy that attempts to mimic the returns of a certain asset or group of assets by using a combination of different derivatives rather than buying the individual shares in the market. Traders will attempt to profit from the leverage found in options and futures because they can provide the same type of exposure to the underlying asset for a lower cost than if the trader were to buy the underlying assets outright.

Reverse Stock Split

Reverse Stock Split

A reduction in the number of a corporation's shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares (market capitalization) remains the same. For example, a 1-for-2 reverse split means you get half as many shares, but at twice the price. It's usually a bad sign if a company is forced to reverse split - firms do it to make their stock look more valuable when, in fact, nothing has changed. A company may also do a reverse split to avoid being delisted.