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What happens to my options in a reverse split?

A reverse split does not change what your option is worth on the day it happens. The contract is rewritten so it delivers fewer shares at the same strike. What changes is how easy it is to get out.

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

The short answer

In a reverse split, your option keeps its strike and its contract count. What it delivers changes. In a 1-for-10 reverse split, a contract that used to cover 100 shares now covers 10 new shares. The symbol usually gets a number on the end, like XYZ1.

The rewrite is done by the OCC, the clearing house behind every listed US option. Its goal is simple: the event itself should not make either side richer or poorer. The math lines up on day one. The trouble starts after.

This is one part of a bigger picture. My hub on corporate actions and your options covers splits, buyouts, spin-offs and the rest.

What a reverse split does to the shares

A reverse split shrinks the share count and raises the price by the same ratio. Companies usually do it when the price has fallen very low, often to stay listed on an exchange.

In a 1-for-10 reverse split:

• Every 10 old shares become 1 new share.
• A $3 stock becomes roughly a $30 stock.
• Your 100 shares become 10 shares. Same total value, on paper.

It's the opposite of a normal Stock split. Nothing about the business changes. Only the slicing does.

Your contract, before and after

Here is what one option contract looks like before and after a 1-for-10 reverse split.

Read that strike line twice. The strike still says $5. But $500 now buys only 10 new shares. That is $50 per new share. If you look at the new stock at $30 and the strike at $5, the option looks hugely in the money. It isn't. The real comparison is 10 shares at $30 ($300) against $500.

This is called a Non-standard deliverable. My guide to adjusted options shows how to read one in your broker. And if you are wondering about the number on the end, see why your option symbol ends in a 1.

What if the ratio doesn't divide evenly?

Some reverse splits don't fit 100 shares neatly. Take 1-for-15: 100 divided by 15 is 6.67 shares. Shares don't come in pieces, so the contract usually delivers 6 new shares plus cash for the leftover part. The cash amount is set when the split happens.

The exact terms for your contract are in the OCC's information memo for that event. Your broker can point you to it. See how to read an OCC memo.

A worked example where it goes wrong (hypothetical)

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

XYZ trades at $5.50. You sell one put with a $5 strike for $0.40. You collect $40. Your broker sets aside $500.

Then the stock slides to $3. The company announces a 1-for-10 reverse split. After it, your put delivers 10 new shares at a total of $500. The new stock opens near $30.

Stocks that reverse split are often in trouble already. Say new XYZ keeps sliding to $25.

At $25, the put is worth at least $250 ($500 − $250). Buying it back costs that much or more. Taking assignment costs the same $210 net. The split didn't cause the loss. The falling stock did. But the split made the exit harder.

Why adjusted contracts get hard to trade

After the split, new standard options start listing on new XYZ. Those deliver 100 new shares, like any normal contract. Most traders move to them.

Your old contract stays behind as XYZ1. Fewer people trade it. That means:

• Wide spreads. The gap between the bid and the ask can be a big slice of the option's value. In the example, you might see a bid of $2.50 and an ask of $3.00. That's a $50 gap on one contract.
• Few buyers. Market makers still quote it, but Open interest usually shrinks from here.
• Confusing quotes. Some screens can show the adjusted contract's Greeks or "in the money" status wrong, because they assume 100 shares.

Traders on forums have described the same surprise: they opened their account after a reverse split and found their calls had turned into an odd, hard-to-sell contract. That is normal. It is not an error.

What to do if it happens to you

1. Find the memo. Look up the OCC information memo for the split. Note the new deliverable and the new symbol.
2. Do the real math. Multiply the deliverable shares by the new price. Compare it with strike × 100. Ignore what the "in the money" label says.
3. Decide early. Adjusted contracts rarely get easier to trade. If you want out, use a limit order near the middle of the spread.
4. If you sold a put and might be assigned, know you'd receive 10 shares, not 100. You can't sell a normal covered call on 10 shares. Read what to do with odd shares after a reverse split.
5. For next time, check a company's filings for a planned reverse split before selling options on a very cheap stock. When shareholders must vote on it, the plan is public weeks ahead.

This matters more for the wheel strategy than for most trades. The wheel depends on clean 100-share lots. A reverse split breaks the lot.

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