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On the day of ex-dividend you can already unload the stock. Ex-dividend merely means the day that is too late to buy the stock and get the dividend, so anyone who you sell the stock to will not get the dividend, only you. It will all depend on if you will see on ex-dividend day if the day...

----------------------------------------------------------------------------------- All what I meant was to add that if "you" want to buy the calls long to take advantage of the dividend it won't work because the specialist do protect themselves in the "ask" quote. I agree with your premise...

You're fine if you own the underlying stock, and they would likely take the dividend away from you. (It could depend upon if the specialists, who are the main bid and ask, have sufficient in-the-money puts to exercise and cover the price drop the next day; they will do their calculations...

Reply to Madgenius The difference you made is a good point--only a bit theoretical. I subscribed to a service ("Ex-dividend") to find the highest paying dividend in-the-money calls, to see about possibility of selling covered calls (in-the-money), but I saw quite consistently that the bid...

Response to Don87109: The ask price to buy calls long fully factors in the dividend, the bid price sometimes does and partially. What you are saying regarding puts: Quite interesting, but even after the ex-dividend date the ask price of puts remains high, so if you though you would sell...

I know people doing options for over 20 years who never knew of this. Nowadays, people do market scans and find the best option plays, and end up getting caught with spreads and other plays that look and are "too good to be true."

It is partially factored in. The justification given is because the next day the stock will open up at a lower price, parallel to the amount of the dividend, which may help people who wrote uncovered calls and can now buy the stock back cheaper, but won't help the writers of spreads.

Correction: T+1 merely means the amount of time for settlement, for non-dividend purposes. E.g. ex-dividend is 3 business days before settlement date, seemingly chosen because stocks are T+3. But acc. to that, the concern of early exercise for options which are T+1 should be till the day before...

I wasn't suggesting early exercise in general is a problem.

I should have mentioned here that call credit spreads would not be prudent advice in the case of MO, as it is a dividend paying stock, and early exercise before ex-dividend would mean you pay dividend out of your own pocket. Just started a new thread regarding same.

Knew one to me. Thanks

I think you mean European style options as found on index options, as they cannot be exercised early.

If the calls you wrote go in-the-money just before ex-dividend, and you don't have the underlying stock, it is common for the calls to be exercised (the day before ex-dividend) and you will have to pay the dividend out of your own pocket as if you were short the stock! I.e. call calendar...

If called early, it will probably to capture the dividend, and you won't get the $.80. They stand to do this right before ex-dividend date. I have a lot to say on the topic of dividends, and will start a new thread. Also, for safety by covered calls, perhaps turn it into a collar, i.e. buy...

Have you tried condors for option strategies? (IF done properly, my understanding is this can offer some of the better option plays out there in terms of risk/ return.

The company I mention offers a choice between Direct Access platform or regular web platform, and they offer the same $.65 per contract rate for my group for either platform. A trader who wants/needs great executions should use a Direct Acces platform; the flexibility to enable quick...

Other than saying it is not IB, no more guessing games.

I was offered a deal for $.65 per equity option contract but with a minimum monthly volume of 25k contracts. Although I do only about 5k contracts, they agreed to allow the goal to be achieved as a group effort. If you want to join and are an Elite Trader member, you may e-mail me, perhaps...