A corporate action is an event initiated by a publicly traded company that affects its shareholders and typically requires shareholder approval or notification. Common corporate actions include stock splits, dividends, mergers, acquisitions, spin-offs, and rights offerings. These events can significantly impact stock prices, trading strategies, and portfolio positions.

Corporate actions often require adjustments to derivative contracts, options positions, and futures contracts to maintain fair value relationships. Traders must stay informed about pending corporate actions as they can create trading opportunities or require position adjustments. Some corporate actions are mandatory (affecting all shareholders), while others are voluntary (requiring shareholder choice).

Real-world example: Apple announces a 4-for-1 stock split, causing options contracts to be adjusted so that each original contract now represents 400 shares at one-quarter the original strike price.