GMR - special dividend

1

11Blade

GMR has runup from 33 to 45 or so in the midst of announcing a 15$ special dividend payable to holders I think march 9th but goes ex-div on March 26th.

Is it reasonable to expect GMR to gap down 15+reg dividend on the ex-dividend day.

After removing 15 dollars of cash from the balance sheet. Is the stock worth more than 30 bux?

Is this a good way to gain 15$ per share taxable at dividend rate, take the short term capital loss to offset a short term gain and win out taxation wise?

in other words..

I have a short term gain of $10k taxable at 30%+ already booked on another stock.

if I buy X amount of GMR stock to gain
$10k in special dividend taxed at 15%

Sell GMR at 10k loss, and negate the $10k short term gain.
save myself 15% tax???

opinions and dissection welcome
 
Quote from 11Blade:


in other words..

I have a short term gain of $10k taxable at 30%+ already booked on another stock.

if I buy X amount of GMR stock to gain
$10k in special dividend taxed at 15%

Sell GMR at 10k loss, and negate the $10k short term gain.
save myself 15% tax???

opinions and dissection welcome
More...

First, yes, you can be certain the stock will gap down roughly $15 per share on the ex-D date. The tax strategy will not work effectively, though, because there is a minimum holding period in order to get the reduced tax rate for a dividend received. I'm not sure if this is 30 days, or some other duration, but I'm 99% certain you cannot buy the day before the ex-D date and sell on the ex-D date and have a tax benefit to go with your essentially breakeven trade.
 
What happens if I buy PUT's on this stock?

Do I pay the 15.00 to the PUT seller for the dividend?

How is this settled or exactly what are the mechanics of such a trade?

11Blade
 
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