Can someone explain ex-div date on dividends?

G

garymc

I am a shorterm swing trader.

I bought GAP(Great Atlantic Pacific) two days ago. They are issuing a $7.25 dividend on Apr 25 to shareholders of record on Apr 17. Yahoo has the ex-div date as Apr 12(today).

Today the stock dropped about $7.25 dollars yet Yahoo and CNN Money show the stock as being positive today, obviously taking the $7.25 into account.

My questions:

Why did it drop today and not Apr 17(shareholder of record date)?

Do I have to hold until Apr 17th in order to collect the dividend?

If I sold tomorrow morning, do I lose the dividend?
 
Quote from garymc:

I am a shorterm swing trader.

I bought GAP(Great Atlantic Pacific) two days ago. They are issuing a $7.25 dividend on Apr 25 to shareholders of record on Apr 17. Yahoo has the ex-div date as Apr 12(today).

Today the stock dropped about $7.25 dollars yet Yahoo and CNN Money show the stock as being positive today, obviously taking the $7.25 into account.

My questions:

Why did it drop today and not Apr 17(shareholder of record date)?

Do I have to hold until Apr 17th in order to collect the dividend?

If I sold tomorrow morning, do I lose the dividend?
More...

OK, on "ex-dividend" date, the stock will open down the amount of the dividend to compensate for paying the dividend. For example, if a stock had a 50 cent dividend, and closed the previous day at $31.00 (and opened "unchanged") the price the next morning would show $30.50 "unchanged"...any up or down in price would be calculatd based on the previous day's closing price minus 50 cents.

Record date accounts for the 3 day settlement period.

You shouldn't lose the dividend because your sale also has a 3 (trading) day settlement.

If you're trading a retail account, I would suggest checking with your brokerage firm about proper "ex" dates...they often show different dates from different sources.

Don

Hope this helps..

Don
 
Quote from garymc:

I am a shorterm swing trader.

I bought GAP(Great Atlantic Pacific) two days ago. They are issuing a $7.25 dividend on Apr 25 to shareholders of record on Apr 17. Yahoo has the ex-div date as Apr 12(today).

Today the stock dropped about $7.25 dollars yet Yahoo and CNN Money show the stock as being positive today, obviously taking the $7.25 into account.

My questions:

Why did it drop today and not Apr 17(shareholder of record date)?

Do I have to hold until Apr 17th in order to collect the dividend?

If I sold tomorrow morning, do I lose the dividend?
More...

the same day it trades ex dividend you can sell it and you will get the dividend at whatever date they pay it out.
 
Don/Vhehn,

My strategy says sell tomorrow, so I guess I'll let it.

Thanks a bunch!

It sure is great to have you guys around!!!
 
I understand ex-dividend dates, record dates, etc., but I'm confused about something.

What stops someone from taking a short position right before a stock trades ex-dividend and then covering his position after the stock has dropped the $0.25 and making an immediate profit?
 
Quote from trom:

I understand ex-dividend dates, record dates, etc., but I'm confused about something.

What stops someone from taking a short position right before a stock trades ex-dividend and then covering his position after the stock has dropped the $0.25 and making an immediate profit?
More...

you will owe the dividend. shorts have to pay the dividend if they hold over the exdividend day.
 
Quote from vhehn:

you will owe the dividend. shorts have to pay the dividend if they hold over the exdividend day.
More...

Ahhhhh! I forgot about that. Thanks.
 
Quote from vhehn:

you will owe the dividend. shorts have to pay the dividend if they hold over the exdividend day.
More...

Come on guys, listen to Mr. vhehn and I..."no free lunch" (very) few dividend "plays" ...those much smarter than I have been working very complex option, SSF, and other derivative dividend plays for a long, long, time....very few work....

However, the fact that you are thinking shows that you have promise as far as trading is concerned....

Don:)
 
Quote from Don Bright:

Come on guys, listen to Mr. vhehn and I..."no free lunch" (very) few dividend "plays" ...those much smarter than I have been working very complex option, SSF, and other derivative dividend plays for a long, long, time....very few work....

However, the fact that you are thinking shows that you have promise as far as trading is concerned....

Don:)
More...

So Don,

To arb the dividend you could just box(reversal) it with a SSF? ie. synthetic long underlying(long call + short put) and simultaneously sell the SSF short, and capture the dividend since SSF's don't pay the dividend? What am I missing?
 
You must log in or register to reply here.
Back
Top