To The Moon

A stock split happens when a company increases the number of its shares to boost the stock's liquidity. Although the number of shares outstanding increases by a specific multiple, the total dollar value of all shares outstanding remains the same because a split does not fundamentally change the company's value.

Swensen's anyone?

However, the ultimate guide to the an over-the-top ice cream parlor sundae — a classic banana split is much simpler:

Ingredients

2 tablespoons homemade or store-bought hot fudge sauce

1 tablespoon roasted, salted peanuts or nuts

1 medium banana

2 scoops vanilla ice cream

2 scoops chocolate ice cream

Now back to business: with the upcoming NVDA 10:1 split, for every share held before the split, each stockholder will have ten shares after the split. NVDA chooses to split their stock to lower its trading price to a more comfortable range for most investors and to increase the liquidity of trading in its shares. The price per share after the 10-for-1 stock split will be reduced by dividing the old share price by 10 since a stock split does not alter the company's value as measured by market capitalization.

Companies go through the hassle and expense of a stock split? First, a company often decides on a split when the stock price is quite high, making it expensive for investors to acquire a standard board lot of 100 shares.

Close credit spread for 98% gain

The higher number of shares outstanding can result in greater liquidity for the stock, which facilitates trading and may narrow the bid-ask spread. Increasing the liquidity of a stock makes trading in the stock easier for buyers and sellers. This can help companies repurchase their shares at a lower cost since their orders will have less of an impact on a more liquid security.

While a split, in theory, should have no effect on a stock's price, it often results in renewed investor interest, which can have a positive effect on the stock price. While this effect may wane over time, stock splits by blue-chip companies are a bullish signal for investors.

A stock split may be viewed by some as a company wanting a bigger future runway for growth; for this reason, a stock split generally indicates executive-level confidence in the prospect of a company.

A forward stock split increases the number of a company's shares but doesn't automatically mean that the holders of the stock will see an increased value in their holdings. It is often done because the price of the individual shares has risen to such an amount that the costs of purchasing individual shares have become prohibitive for ordinary investors.

Roll covered call for another week

NVIDIA on May 22, 2024, announced a 10-for-1 forward stock split of the company's issued common stock. As of the close of the market on Thursday, June 6, 2024, record holders of common stock will receive nine additional shares for each NVDA share they already own. NVDA gave a reason for its forward stock split announced on May 22, 2024: the wish "to make stock ownership more accessible to employees and investors."

I know what’s on your mind options traders! A conventional stock split is a fairly clean increase of position size and a strike price adjustment and doesn't affect the value of an options position. It only means that the investor will be holding a greater number of contracts at a lower price.

I’ve experienced positive returns from TSLA’s split twice. I didn’t participate in AAPL although it went north, GOOGL went south and AMZN rose and fell with the bear market. So go ahead to buy your calls, sell your puts, take your spreads, wheel it, roll it or simply cool it down by taking the classic banana split instead 😋

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