Adjusting the strike price of an OTC option by the amount of dividends paid on the underlying asset/ stock. This means the strike price is decreased on the ex-date by an amount equal to the dividend. Broadly speaking, the adjustment process can be carried out in different ways: restating stock prices on a pre-dividend basis, accumulating dividends till payment at exercise of the options, and decreasing the stock option strike price when dividends are actually paid out.
January 17, 2024
