An equity call trading on the CBOE with a strike price of 75

An equity call trading on the CBOE with a strike price of $75 has its underlying stock seven for six. What will be the new strike price after the split?

Xnew = $66.67

Xnew = $56.88

Xnew = $64.29

Xnew = $70.83

Xnew = $84.44

Solution

the new strike price after the split = 75 * 6/7

the new strike price after the split = 64.29