Additionally, the distance between strike prices will shrink, giving more flexibility in strike selection when building trades. The liquidity improvement would also carry over to the options market. After the split, it could rise four-fold to around 30 million, which would tighten bid-ask spreads. The average volume today is approximately 7.5 million shares.
It also increases the daily trading volume bringing greater liquidity. The cheaper price brings in a new class of potential buyers that were previously turned off by the sky-high price for starters. 8 Best Utility Stocks to Buy for Downside Protectionīut that doesn’t mean there aren’t some psychological and trading perks that come with the price reduction.As always, there’s no net change in the value of your investment. When the adjustment happens, your position will balloon to 100 shares while the share price gets cut to $150. Suppose you own 25 shares at $600 pre-split. Remember, NVDA stock was trading at $20 in 2015 before the semiconductor industry exploded. But, with Nvidia’s stock price rising so much over the past five years, the company decided to go bigger on the split to pull prices even lower.
Historically the most common type of split is 2 for 1.
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