What happens to an option if the underlying stock has a 3-for-1 split?
A. There is no change in either the exercise price or in the number of options held.
B. The exercise price will adjust through normal market movements; the number of options will remain the same.
C. The exercise price would become one-third of what it was, and the number of options held would triple.
D. The exercise price would triple, and the number of options held would triple.
E. There is no standard rule— each corporation has its own policy.
C. The exercise price would become one-third of what it was, and the number of options held would triple.
This is similar to what happens to the underlying stock.
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