Apple and Tesla Stock Split

Bahram Negahban
Apple and Tesla’s stock split has opened a great door for new investors.
Tesla and Apple have finally split their stock. What this means is that they have increased their share amount but decreased their share price. Both stocks dramatically changed in price, but due to the companies increasing the number of shares, the price was virtually the same. 

When purchasing a share, you are purchasing a part of a company. When a stock split occurs, the company increases the number of shares by the amount that they are deducting the share price by. For instance, Apple was a 4-1 split which means that the share price is divided by 4, but the company also increases the number of shares that they sell. The reason companies do this is to open up a new door for smaller investors due to the affordability of the shares. 

A lot of people in 2020 trade calls and puts. Calls and puts are terms for trading options when you bet on the stock price going down or up. Investors of Apple and Tesla were very confused about the idea of the stock price going down. Many brokerages over the weekend sent out emails and alerts explaining the effects on calls and puts. Calls are basically when you purchase a contract of 100 shares and you pick a strike price and a date and as the stock goes closer to the strike price the contract price increases, therefore you would profit. The strike price would be divided by the amount the stock is splitting by so for Tesla’s 5-1 split whatever strike price you picked was divided by five but you would as well get five contracts. 

In the long run, apple, and tesla stock splits will overall be great for the companies and open doors for many new investors.


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