If options expire on ex-div date?

1a2b3cppp · Sep 14, 2012

I have a covered call position with a 9/21 option on SPY.

The ex-div date is also on 9/21.

Am I going to get the dividend as long as my option isn't called away before then? If so, what are the chances of that happening?

loufah · Sep 16, 2012

My experience is that if you still own the stock on the morning of the ex-div date, you will get the dividend.

newwurldmn · Sep 16, 2012

Quote from 1a2b3cppp:

I have a covered call position with a 9/21 option on SPY.

The ex-div date is also on 9/21.

Am I going to get the dividend as long as my option isn't called away before then? If so, what are the chances of that happening?

You will get the dividend if you aren't exercised. Odds are that if the option is in the money by more than the dividend you will get exercised.

Rationalize · Sep 17, 2012

Quote from loufah:

My experience is that if you still own the stock on the morning of the ex-div date, you will get the dividend.

Rationalize · Sep 17, 2012

Quote from newwurldmn:

You will get the dividend if you aren't exercised. Odds are that if the option is in the money by more than the dividend you will get exercised.

Some might say that the trade here is those odds specifically

1a2b3cppp · Sep 17, 2012

Quote from newwurldmn:

You will get the dividend if you aren't exercised. Odds are that if the option is in the money by more than the dividend you will get exercised.

Thanks.

Don Bright · Sep 17, 2012

You really won't know until Monday since they "can" early exercise, or they can simply wait for auto expiration. Early exercise, you may pay, of course.

All the best,

Don

Rationalize · Sep 17, 2012

the point here is that the dude on the long endcould be a moron if he does not exercise when itm & div > extrinsic.

Don Bright · Sep 18, 2012

Quote from Rationalize:

the point here is that the dude on the long endcould be a moron if he does not exercise when itm & div > extrinsic.

I would choose to word it differently, but you're exactly right, LOL.

Don

sle · Sep 19, 2012

Quote from Rationalize:
the point here is that the dude on the long end could be a moron if he does not exercise when itm & div > extrinsic.

Yes, that bit has been called "statistical arbitrage" by some...