The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question – “What is a stock split?” A stock split is exactly what it sounds like. For whatever reason, the company decides to split their stock and effectively cut the share price in half or by a third or by a fifth and issue a lot more shares in exchange. A very simple example of this would be if a company’s stock is trading at $100, they might decide to go through a two for one stock split, in which case, every investor that owns one share now owns two shares of the company at half the price or $50 per share. Now, no value was basically erased or created from going through a stock split. It’s just an accounting measure to change the per share value of the company based on the float or the number of shares outstanding that are issued. Again, if you have one share that’s worth $100 and now, after the two for one stock split, you have two shares, each worth $50, you’re still effect