A share split is a scenario where the company’s management decides to increase the number of shares in the company to enhance the liquidity of the company. While the number of shares in the company increases, the price per share decreases. As a result, each share is now traded at a lower price than before. However, there is no effect to the equity in the company. Shareholders’s funds stay constant.
In general, the market views share splits positively. It is common to see shares rise from the date of announcement to the day that the shares split. Options traders can take advantage of this by buying calls.
Read: Share Price