option price ex dividend date

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stockoptionstrader

Normally after the ex dividend date, a stock goes down.

If you buy puts then, isn't easy money then?

I know it is already priced in the put options but I don't understand what this means.

The put option will still rise after a drop even if you paid a little bit more for the premium. You still get your % gain after the drop in price of the stock.

Can someone explain?
 
The value of the Put option will need something other than the dividend to impact the price of the option. Some news event happening that day. The entire sector of the underlying is getting hammered for some reason. Something other than the dividend alone.

How can ex-dividend date impact my option trade?

The stock will open down by the amount of the dividend on the ex-dividend date. For example a $50 stock paying a regular quarterly dividend of $0.75 will open at $49.25 the morning of the ex-dividend date. From there supply and demand forces will take over for the rest of the session. So maybe it is a good idea to buy puts just before the ex-dividend date, watch the stock drop the next morning, and sell the puts for a profit right at the open! For obvious reasons, this is not how it works.

Option extrinsic value is “adjusted” to accommodate an upcoming ex-dividend date weeks prior to that date so that no unusual gains or losses are experienced by option traders. Call options see a decline in their extrinsic value and put options see a rise in their extrinsic value prior to the ex-dividend date.
 
stockoptionstrader said:
Normally after the ex dividend date, a stock goes down.

If you buy puts then, isn't easy money then?

I know it is already priced in the put options but I don't understand what this means.

The put option will still rise after a drop even if you paid a little bit more for the premium. You still get your % gain after the drop in price of the stock.

Can someone explain?
More...

I believe Wally World goes ex-divy tomorrow... lets see what happens. I'll watch it.
 
stockoptionstrader said:
Normally after the ex dividend date, a stock goes down.

If you buy puts then, isn't easy money then?

I know it is already priced in the put options but I don't understand what this means.

The put option will still rise after a drop even if you paid a little bit more for the premium. You still get your % gain after the drop in price of the stock.

Can someone explain?
More...
Buy 1 contract and see for yourself. These days everybody's making money so why not you.
 
Catman.... I need you to go home and binge watch some Seinfeld etc and work on the comedy..... you're slippin bro.

One more post.... and if I don't laugh... you are forever in Zandyland purgatory.

Work on it.

Perhaps you can "reboot"... which seems to be the latest in catch-phrases.
 
WMT went ex-div today. If you own it before 4PM, you get 50 cents on 9/6.

Stock up 1.22

Should be a good short tomorrow at 9:35 AM. We shall see.
 
One thing I just learned about expiration Friday.... if you own a pile of puts on a $1400 stock, and you don't answer your phone.... those fuckers will close your position for ya.....

They actually did me a favor as the Priceline pig ran into the close. lmao.

30 years of trading.... this one was a first. New account though so they get a pass.
 
vanzandt said:
One thing I just learned about expiration Friday.... if you own a pile of puts on a $1400 stock, and you don't answer your phone.... those fuckers will close your position for ya.....

They actually did me a favor as the Priceline pig ran into the close. lmao.

30 years of trading.... this one was a first. New account though so they get a pass.
More...




You obviously didn't have the PCLN shares to deliver, otherwise they wouldn't have closed the position.





:)
 
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