# Corporate Actions and Adjusted Options

Corporate actions can change what an option contract represents. A split, merger, special dividend, spinoff, liquidation, bankruptcy event, or symbol change can alter deliverables, contract size, settlement behavior, or the option symbol used by market participants.

Use this guide when building contract validation, sizing, backtesting, or support workflows for adjusted options.

## Quick answer

Do not assume every equity option contract represents exactly 100 shares of the current underlying ticker. Standard contracts commonly do, but corporate actions can create adjusted contracts with different deliverables. Use contract reference fields such as `shares_per_contract`, `additional_underlyings`, `correction`, `as_of`, and the full option ticker before sizing a trade, calculating PnL, or replaying history.

## What can change

| Corporate action | Possible option-data effect |
| --- | --- |
| Forward or reverse split | Strike, deliverable, contract multiplier, or symbol can change. |
| Merger or acquisition | Deliverable can become cash, shares of another security, or a mixed package. |
| Special dividend or distribution | Deliverable or strike can be adjusted. |
| Spinoff | Contract can include additional underlying components. |
| Bankruptcy or liquidation | Settlement and expiration handling can change. |
| Symbol change | Underlying or option symbol can change while historical identity remains important. |

The exact adjustment is contract-specific. OCC information memos are the authoritative place to review many contract-adjustment events, while API reference fields are the application record your system needs to store.

## Why adjusted options break naive systems

Naive systems usually hard-code three assumptions:

1. One contract equals 100 shares.
2. The current underlying ticker is the only deliverable.
3. A parsed symbol is enough to reconstruct the instrument.

Those assumptions work until they do not. When an adjusted contract appears, sizing can be wrong, PnL can be wrong, and a backtest can select a contract that did not represent the economic exposure the strategy intended.

## Application pattern

When a strategy or UI selects an option contract:

1. Fetch contract reference data with the relevant `as_of` date when history matters.
2. Store the full option ticker and reference fields.
3. Read `shares_per_contract` instead of assuming 100.
4. Preserve `additional_underlyings` when present.
5. Log correction fields and request id.
6. Reject adjusted contracts or send them to an explicit handling branch if the strategy only supports standard contracts.

For current dashboards, display adjusted contracts with a warning or detail panel. For backtests, either model adjusted contracts explicitly or exclude them with a reject reason.

## Backtesting checklist

| Check | Why it matters |
| --- | --- |
| `as_of` contract lookup | Prevents selecting contracts unavailable on the research date. |
| Full option ticker | Avoids joining by underlying alone. |
| Deliverable fields | Protects sizing and PnL. |
| Split-adjustment flag on bars | Keeps price series assumptions visible. |
| Quote/trade timestamps | Confirms market evidence after the corporate action. |
| Reject reason | Documents when the engine excludes adjusted contracts. |

## Official references

- [OCC information memos](https://infomemo.theocc.com/infomemo/search)
- [OCC corporate action information submission form](https://www.theocc.com/clearance-and-settlement/corporate-action-information-submission-form)
- [OCC equity options product specifications](https://www.theocc.com/clearance-and-settlement/clearing/equity-options-product-specifications)

## Related CuteMarkets docs

- [Contracts](/docs/contracts)
- [Option Symbols and Contract Identity](/docs/option-symbols-contract-identity)
- [Aggregates](/docs/aggregates)
- [Backtesting Data Model](/docs/backtesting-data-model)
- [Backtesting Data Quality Checklist](/docs/backtesting-data-quality-checklist)