invest in stk

[clarodina]

invest in stk for months but when theres dividend of a dollar or more the stk price decreases

for month investment the decrease do not really pose problem but veterans any method to hedge the decrease?

 

[drm7]

The "hedge" is the $1.00 dividend. You get that money directly.

 

[clarodina]

yeh but waht instrument use for the hedge and how to do?

 

[drm7]

There's no need to hedge, the stocks drops by the same amount as the dividend, so you don't lose any money.

Example:

You buy stock XYZ for $20. It declares a $1 dividend.

The stock opens the next day at $19, but you get $1 deposited into your account.

 

[clarodina]

yes know but is there some ways to hedge the price fall? some advocate selling options but is risky

 

[CT10Gov]

But you didn't lose any money!! Just back an extra dollar worth of the stock and you are in the exact same position as pre dividend.

Quote from clarodina:

yes know but is there some ways to hedge the price fall? some advocate selling options but is risky