Early Assignment Risk?

spindr0 said:
Here's an example of a mispricing:

XYZ is $40
Nov $45 put is $5.30
Dividend is is 50 cts.

Buy stock/buy put, exercise the next day after ex-div

- $40.00 - $5.30 + $45.00 + $.50 = + 20 cents
More...
Oh, I see - when you said "time value" you look at it vs spot, not the forward. I would describe this situation as "the put is pricing below the intrinsic value vs the forward". In short, you are saying that someone has mis-priced the forward which should never happen in the modern world.
 
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