Patent ID: 8145551

Claim:
A system for adjusting the value and terms of equity derivative contracts to account for time value of money due to an occurrence of a corporate event that affects the value of said equity derivatives, said corporate event being a stock split or stock dividend on said an underlying security, comprising: a computer processor programmed to: receive financial information regarding at least one of the equity derivative contracts, wherein the at least one of the equity derivative contracts comprises at least a termination claim and the length of the equity derivative contract, and wherein each equity derivative contract represents one of three economic components of an underlying security: a dividend value of stock (DIVS) component representing a stream of dividends distributed to holders of the underlying security, a residual interest in stock (RISKS) component representing a speculation on future gains of the underlying security, and an option with limited stock (OWLS) component representing the remaining value of the underlying security absent the DIVS and RISKS components, and wherein the termination claim determines the payout between the OWLS and DIVS components at the end of the equity derivative contract; receive information identifying a stock split or stock dividend on the underlying security; adjust the termination claim of the at least one equity derivative contract to its present value based on one or more pre-defined formulas and at least on the length of time remaining on the equity derivative contract to account for the time value of money; adjust the number of the at least one equity derivative contract, based on the adjusted termination claim, to account for the stock split or stock dividend to maintain one for one correspondence to shares of the underlying security, thereby affecting the value and terms of the equity derivative contracts; and a computer storage disk programmed to store the adjusted DIVS component, adjusted OWLS component, adjusted RISKS component, and adjusted number of equity derivative contracts.