Dividend payments, stock splits, and mergers all affect stock prices. When dividends are paid, the stock price drops by the same amount, a split lowers a stock’s price because more shares are issued, and mergers often result in a new, higher-priced stock.

Stock options are also affected by dividends, stock splits, and mergers, but the changes they undergo aren’t as straightforward as the ones in the underlying stock because option contract details are sometimes changed by the Options Clearing Corporation (OCC) in response to these events.

Before trading options, it’s a good idea to check if dividends, splits, or mergers are scheduled for the underlying stock.