Tesla Inc. (TSLA) recently announced a 3-for-1 stock split. Distributions from the stock split will be made to Tesla shareholders at the close of business on August 24, and trading will begin on a split-adjusted basis on August 25. The stock split happens automatically in your account, and you are not required to do anything. TD Ameritrade does not charge a fee for this type of a stock split.
If you own shares of TSLA on or before August 24, on August 25 you will receive 3 shares in exchange for every 1 you hold, and the stock price will be reduced to one-third of its value. For example, if you owned one share, and the price at market close on August 24 was $900, before market open on August 25 you’d own 3 shares, each worth $300. Likewise, if you own one call option with a strike price of $900, with a 3 for 1 split, you will own 3 call options at a $300 strike price.

A forward stock split occurs when a company increases the number of its outstanding shares, which decreases the share price. As a result, while eligible shareholders with shares at the time of the split will receive more shares, the total dollar value and cost basis of their positions will not change.

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Short positions will reflect the adjusted number of shares and price. Example: A shareholder holds a short position of 100 shares of TSLA on August 25, 2022. As a result of the 3:1 split, the client will hold a short position of 300 shares with the adjusted split price.