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August 26, 2020

HYCM, What happens with Apple and Tesla Stock Split?

What happens to open positions with Apple and Tesla Stock Split?

What-happens-with-Apple-and-Tesla-Stock-Split What-happens-with-Apple-and-Tesla-Stock-Split

Apple and Tesla have recently announced that they will proceed with a stock split of 1-for-4 for Apple and 1-for-5 for Tesla which will take effect on Monday, 31st August 2020.

Upcoming Apple and Tesla Stock Split

We would like to draw your attention to the recent announcement from two of the most popular technology companies: Apple and Tesla.

The pair declared that they would proceed with a stock split on Monday August 31st, 2020.

Tesla shares will be split into five, while Apple stock will see a four-for-one split.

Over the last 12 months, both companies’ stocks have run substantially higher.

So, a stock split will make their stocks more accessible to a larger base of investors.

In turn, this will drive up demand for the shares.

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What is a Stock Split?

Apple and Tesla stock prices have been performing very well recently.

What are we going to see next? A split.

Is it good? Generally, it is a sign that a company is pretty confident in its performance, sees no impediment for further growth, and wants to gain access to wider circles of investors.

Hence, for traders, it merely means that more of us will be able to afford Apple and Tesla shares — fundamentally, that will be another strong factor to boost the stocks.

While stock prices set records, Apple and Tesla have prepared a surprise for you.

On August 31, the technology companies will complete their stocks split.

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1. Apple — 4-for-1 split

It means that the price of Apple stock will be 4 times lower than usual.

For example, if the stock costs $400, it will cost only $100.

If you already trade Apple stocks, after August 31 your assets will increase fourfold!

2. Tesla — 5-for-1 split

It means that instead of one Tesla stock, you will have 5! And the price will be lower.

For example, if the stock costs $1 800, it will cost only $360.

Consequently, after August 31, Tesla stocks will be more accessible.

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Kindly see below for important examples regarding how the stock splits will affect your open positions.

Stock Split of Apple Stocks

Apple will split its stock on a 4-for-1 basis.

That means Apple’s existing shareholders will receive three additional shares for every one they currently own.

Apple is being traded near $500 per share; the share price should drop to about $125 after the split.

You’ll see that change on Aug 31, which is the date the stock will start trading on a split-adjusted basis.

Please refer to the information below if you hold open positions in Apple CFD’s (1-for-4 stock split)

  1. All CFD_AAPL positions will be closed with the same price as their original opening price.
  2. All CFD_AAPL positions will be re-opened with the adjusted price and volume:
  3. Volume = opening volume times 4.
  4. Price = opening price divided by 4 (rounded to the 2nd decimal point, if required).
  5. Accrued Swap/Interest charges will be realized and will not be transferred to the new positions.
  6. The level of your S/L and T/P orders, if any, will be adjusted accordingly (divided by 4 and rounded to the 2nd decimal point, if required).

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For Example:

A client is long 5 lots (500 shares) of CFD_AAPL @ 490.56.

The client’s investment is worth USD245,280 (500 shares x 490.56). CFD_AAPL is subject to 1-for-4 stock split.

The position is closed @ 490.56 (the original opening price). The P/L is $0.

The position is re-opened:

5 lots become 20 lots (4 x 500 = 2,000 shares) @ 122.64 (490.56/4 = 122.64).

The client is now long 20 lots (2,000 shares) @ 122.64.

The value of the client’s investment remains unchanged at USD245,280 (2,000 shares x 122.64).

The net financial effect of the stock split is nil.

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Stock Split of Tesla Stocks

Please refer to the information below if you hold open positions in Tesla CFD’s (1-for-5 stock split).

  1. All CFD_TSLA positions will be closed with the same price as their original opening price.
  2. All CFD_TSLA positions will be re-opened with the adjusted price and volume:
  3. Volume = opening volume times 5
  4. Price = opening price divided by 5 (rounded to the 2nd decimal point, if required)
  5. Accrued Swap/Interest charges will be realized and will not be transferred to the new positions.
  6. The level of your S/L and T/P orders, if any, will be adjusted accordingly (divided by 5 and rounded to the 2nd decimal point, if required)

For Example:

A client is long 1 lot (100 shares) of CFD_TSLA @ 2050.00. The client’s investment is worth USD205,000 (100 shares x 2050.00). CFD_TSLA is subject to 1-for-5 stock split.

The position is closed @ 2050.00 (the original opening price). The P/L is $0.

The position is re-opened:

1 lot becomes 5 lots (5 x 100 = 500 shares) @ 410.00 (2050.00/5 = 410.00).

The client is now long 5 lots (500 shares) @ 410.00.

The value of the client’s investment remains unchanged at USD205,000 (500 shares x 410.00).

The net financial effect of the stock split is nil.

Apple and Tesla shares will start trading at the new split-adjusted price on Monday, 31st August 2020.

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