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Are stock splits necessary now that many brokerages have fractional shares? It seems the true metric is percentage gained or lost rather than the price.
by cercatrova 6y ago
Are stock splits necessary now that many brokerages have fractional shares? It seems the true metric is percentage gained or lost rather than the price.
- 1123581321 6y agoI don’t think splits are necessary. Fractional shares are an abstraction of share ownership though. Many people prefer not to rely on their broker for that.
- cj 6y agoOne thing to note is stock price dramatically impacts the price of options. For example 1 option contract for Amazon (over $3k share price) can easily be $4,000. In comparison, you can buy 1 option for Apple ($400) contract for $200. After the stock split, option contracts will be 1/4 the current price. Lower stock prices make the options market much more accessible to people investing less money (for better or worse).
- runako 6y agoEven more relevant for absolute dollar terms: standard options contracts are for 100 shares. So a single contract of AMZN can require $300k in cash to cover, depending on the brokerage.