The Contract Multiplier and Adjusted Options

Reviewed by Leon Moyer - Published October 9, 2026 - Last reviewed October 9, 2026

The contract multiplier is the number that turns an option's quoted price into dollars. For a standard U.S. stock option it is 100, because one contract covers 100 shares. When a company splits its stock, merges or pays a special dividend, The Options Clearing Corporation (OCC) adjusts existing contracts to leave both sides in roughly the same economic position, and an adjusted contract can end up covering something other than 100 shares.

What is the contract multiplier?

The multiplier converts the quote into dollars, both for the premium and for the cash that changes hands on exercise. Use the multiplier in the contract terms, not the share count:

• Dollar premium = quoted price x multiplier x number of contracts. A quote of $2.40 on one standard contract is $2.40 x 100 = $240.
• Aggregate exercise price = strike price x multiplier x number of contracts. Exercising one standard 50 call means paying $50 x 100 = $5,000.

What a contract delivers on exercise is called its deliverable. For a standard stock option, the deliverable is 100 shares of the underlying, and the multiplier and the share count are the same number. After an adjustment, they can differ.

What happens to options when a stock splits?

A split changes share count and price, not company value, and OCC adjusts existing contracts by the split ratio.

• Whole-number splits (2-for-1, 3-for-1, and so on). The number of contracts is multiplied by the ratio and the strike is divided by it. The contracts stay standard, with 100 shares each. One XYZ 100 call becomes two XYZ 50 calls, and the cash to exercise is unchanged: 1 x 100 x $100 = $10,000 before, and 2 x 100 x $50 = $10,000 after.
• Other ratios (3-for-2, 5-for-4). The number of contracts stays the same, the strike is divided by the split ratio, and the deliverable and the multiplier both grow by it. After a 3-for-2 split, each contract delivers 150 shares and carries a multiplier of 150.
• Reverse splits (1-for-10, for example). The number of contracts and the strike usually stay the same, and each contract delivers fewer, pricier shares: 10 new shares instead of 100 old ones.

OCC memos for 3-for-2 splits follow this method; OCC memo #47619 (Rush Enterprises, 2020, reposted by the MIAX exchange) sets a strike divisor of 1.50, a multiplier of 150 and a 150-share deliverable. Older guides may describe a different method, so check the memo for your contract. Uneven strikes are rounded: a 35 strike becomes 23.33.

How are options adjusted for mergers and special dividends?

Other corporate actions can also change the deliverable or strike.

• Stock mergers. If each XYZ share becomes 0.5 shares of the acquirer, ABC, an XYZ contract becomes a contract delivering 50 shares of ABC, with the strike unchanged.
• Cash mergers. If XYZ is bought for $70 a share in cash, the contract delivers $7,000 in cash. Trading ordinarily stops when the merger takes effect, and expiration may be accelerated; check the OCC memo.
• Special cash dividends. An ordinary dividend does not trigger an adjustment. A special, one-time cash dividend usually does if it is worth at least $12.50 per contract ($0.125 a share on a standard contract), typically by lowering the strike by the dividend amount.
• Spin-offs. The deliverable can become a basket, for example 100 shares of the parent plus some shares of the new company.

The SEC's 2008 order approving OCC's rule change, published in the Federal Register, sets out the $12.50 threshold and extra conditions for already-adjusted contracts. The OIC corporate-action FAQ covers mergers and accelerated expirations.

OCC decides each adjustment case by case and publishes the terms in an OCC Information Memo, normally before they take effect. The memo is the authoritative answer to "what does this contract deliver now?", and you can search them on the OCC Information Memo site.

Why can adjusted options be tricky to trade?

Adjusted contracts are real options, but they come with practical problems:

• Thin trading. New trading moves to the standard contracts listed after the event, so adjusted ones often have few buyers and sellers, and wide bid-ask spreads.
• Misleading numbers. Quote screens, payoff charts and calculators built for 100-share contracts can show the wrong value or break-even for an adjusted one.
• Surprises at exercise. Exercising or being assigned on an adjusted contract delivers the new deliverable, which may be an odd number of shares, another company's stock or cash.

A simple habit avoids most of this: if an option's symbol has an extra digit, or its price does not make sense, check its deliverable in your broker's contract details or the OCC memo before trading it. When a standard contract on the same stock exists, it is usually the easier one to price and trade.