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Adjusted options and non-standard deliverables, explained

An adjusted option is a contract the OCC rewrote after a corporate action, like a reverse split, a merger or a spin-off. The deliverable changes. The strike and the number of contracts usually don't. That's why an adjusted option can look in the money when it isn't.

Options guide · 8-minute read · Updated 2026-10-28

What an adjusted option is

A normal stock option delivers 100 shares of one stock. That's the standard deliverable.

When a company does something that changes its shares, the OCC (the Options Clearing Corporation, which clears every listed US option) rewrites the contract. The goal is that the event itself doesn't make either side richer or poorer.

After that rewrite, the contract may deliver something else: 10 shares, or shares of a different company, or shares plus cash. That's an adjusted option with a Non-standard deliverable.

For the full list of events and what each one does, see my hub on corporate actions and your options.

What changes and what doesn't

The big exception is a simple split like 2-for-1. There, the OCC usually gives you more contracts at a lower strike, and each still delivers 100 shares. No odd deliverable is created. My page on selling options before a split covers that case.

What the new deliverable can look like

Each event leaves its own mark on the contract:

• Reverse split (1-for-10): 100 shares become 10 shares. See options after a reverse split.
• All-cash buyout: the contract delivers cash and usually ends early. See call options in a cash buyout.
• All-stock merger: the contract delivers shares of the buyer.
• Cash-and-stock merger: the contract delivers buyer shares plus cash. See the new deliverable.
• Spin-off: the contract delivers 100 parent shares plus the spun-off shares.
• Stock dividend: the contract may deliver a bit more than 100 shares. For a made-up 5% stock dividend, that would be 105.
• Large special cash dividend: the strike may be cut by the dividend instead, with no change to the shares.
• Ticker change only: the symbol changes. Nothing else does.

A worked example: it looks in the money, but isn't (hypothetical)

This is an illustration, not a trade idea. XYZ is a made-up stock.

XYZ trades at $3. You own 100 shares, bought at $4 (cost $400). You sold one $5 covered call for $0.15, collecting $15.

Then XYZ does a 1-for-10 reverse split. Every 10 shares become 1. Here's what you see the next morning:

• XYZ now trades at $30.
• You own 10 shares.
• Your short call shows as XYZ1, $5 strike.

At a glance, a $5 call on a $30 stock looks $25 in the money. That would be $2,500. It isn't.

The adjusted call delivers 10 shares, worth 10 × $30 = $300. Exercising it costs $5 × 100 = $500. So it's $200 out of the money. For the holder, it's only worth calling away the shares if XYZ climbs above $50.

The adjustment didn't cost you anything. You lost $100 because XYZ fell from $4 to $3 before the split. What the adjustment did was make the contract easy to misread.

How to read the deliverable at your broker

Brokers show this in different places. Look for these signs:

1. A number at the end of the root symbol, like XYZ1 or XYZ2. See why an option symbol ends in a 1.
2. A "non-standard" or "adjusted" flag on the position or the Options chain.
3. A deliverable or Contract multiplier field in the option's details page. It lists what one contract delivers.
4. The OCC information memo for the event. It lists the new deliverable, the new symbol and the effective date. Your broker's support desk can send you to it.

If the screen and the memo disagree, trust the memo, and ask your broker why.

Why to close adjusted options instead of trading them

After an adjustment, new contracts on the stock are listed as standard 100-share contracts. The old adjusted ones keep trading until they expire, but few new traders touch them.

That leads to three problems:

• Thin trading. Few buyers and sellers means wide gaps between the bid and the ask. Closing costs more than it looks.
• Confusing prices. Quotes on adjusted contracts are easy to misread, even for experienced traders.
• A covered call that no longer matches your shares. In the example, 10 shares back one call. If you buy 90 more shares, you still can't sell a standard call on all 100 without closing the old one.

The cleanest move is usually to close the adjusted option with a limit order near the middle of the quote, or let it expire if it's far out of the money. Then decide fresh with standard contracts.

If you run the wheel strategy, that means one adjusted contract is a pause, not a step. Close it, reset to 100 shares, and start the next cycle clean.

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