S ssbc19 May 6, 2008 #1 I'm looking to buy a May put on a stock which has a dividend soon. When I pull the order up in TOS it shows max loss followed by "plus dividend risk". How exactly does that work?
I'm looking to buy a May put on a stock which has a dividend soon. When I pull the order up in TOS it shows max loss followed by "plus dividend risk". How exactly does that work?
M MTE May 6, 2008 #2 If you buy a put then there's no dividend risk. The dividend is a problem only with short ITM calls. I think the statement is always there.
If you buy a put then there's no dividend risk. The dividend is a problem only with short ITM calls. I think the statement is always there.
J JKG May 6, 2008 #3 the dividend has been priced in puts. The extrinsic value can never be smaller than dividend. You will lose this extrinsic value once on ex-div date.
the dividend has been priced in puts. The extrinsic value can never be smaller than dividend. You will lose this extrinsic value once on ex-div date.
