And now you want everyone to call you karen the accountant, geez...
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- Thread starter viruscore1
- Start date
And now you want everyone to call you karen the accountant, geez...
Your reading comphrension skills at work again!
As per your previous posts, we need to read between the lines to make sense of your ramblings. You coming out as karen is ok, Caitlyn Jenner has lead your way.
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Your insults are less sophisticated than a 10 year olds.
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I'm going to follow this thread just for the insults. 
That is the most funI'm going to follow this thread just for the insults.
Somebody educate me on put prices near ex-dividend. (I don't trade for dividends.) I assume y'all are saying the price of the put rises to account for the impending dividend, correct? This would make purchasing the put to capture the price drop in the stock a less attractive proposition. So wouldn't it make selling an OTM put a more attractive proposition?
Second question, when I HAVE paid attention to stocks around ex-dividend, it doesn't seem like they always open down by the amount of the dividend. Furthermore, they often recover quickly when they do. Too small of a sample?
Second question, when I HAVE paid attention to stocks around ex-dividend, it doesn't seem like they always open down by the amount of the dividend. Furthermore, they often recover quickly when they do. Too small of a sample?
Options are priced off the forward price of the stock which includes all expected dividends. That means if there is a 50 cent dividend coming up, the put is going to be pricing as if it's 50c further ITM and the call would be pricing as if it's 50c further OTM. Because of the put-call parity, there is no "arbitrage" - if you are holding a synthetic against an actual stock, the drop in the actual stock will be fully priced in by the synthetic.
Well, the stock is volatility and that means it might open at a level different from what the dividend drop is implying. Statistically, there is a tiny bit of statistical advantage in holding a stock across the ex-date, but it's very small (there are a few stat-arb type things to do around dividends and that's one of them).
PS. some of the above option logic breaks a little in case of American options but just a little and I can discuss that if the audience feels like it.
Yes. I certainly like this to be discussed.
My understanding comes from Hull (very old edition) book. I did not pursue further since i rarely deal with individual stocks.
It states that "Assuming strike is close to stock price, the dividend yield on the stock would have to be either close to or above the risk free rate of interest, it would be optimal to exercise"
Other time would be for early exercise for American Call is the final ex-dividend date.
There could be some tax considerations since dividends and gains are taxed differently.
Does anyone pay attention to the bid/ask? Sure the dividend is built in but it varies just like before...