option price ex dividend date

[vanzandt]

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

The puts would have expired in the money. 20 contracts,ie 2000 shares @ $1400/share.... lol..... 2.8 Million Dollars. Nope, didn't have quite that much

I understand why they did it of course, and they did try to call, had I answered I could have told them I was watching it and would have closed it by 3:59 PM. They just don't know me, I'll call em Monday, but you think it would be pretty obvious when I'm trading 4 or 5 round trips daily with them.

Like I said, it actually worked out well, they got a good price for me because I would have held to the bitter end holding out for $1399, which didn't happen and it actually bumped up a buck or so at the close. Saved me 2G's give or take. Good on em.

I'll tell you what Fidelity would have done though.... they won't call ya.... they'll just void your puts even if they are in the money. Those things could have been $20 in the money.... and they would just void em like they expired worthless and the holder is shit outta luck. As well he should be if one can't be responsible for one's own trading.

 

[JesseJamesFinn1]

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?

Retailer XYZ gave a $5 Dividend last year so after the Special Ex-Dividend if you owned the $160 Puts they get reduced to the $155 Puts to match the price of a company's underlying unless the stock opened down harder. Some small brokerages are using Clearing Houses that screw up your accounts for several days after the event. They might even show that your stock options are $3-$3.5 in the money when shares are repriced.


Regular dividends like Pep's upcoming cash dividend or Apple only caused the ATP of the underlying to fall, not the stock options. That's what's been happening so for me with stocks that tank hard after a dividend try to sell a few days before the Ex Dividend because the rise up hits sooner than later.

 

[JesseJamesFinn1]

The puts would have expired in the money. 20 contracts,ie 2000 shares @ $1400/share.... lol..... 2.8 Million Dollars. Nope, didn't have quite that much

I understand why they did it of course, and they did try to call, had I answered I could have told them I was watching it and would have closed it by 3:59 PM. They just don't know me, I'll call em Monday, but you think it would be pretty obvious when I'm trading 4 or 5 round trips daily with them.

Like I said, it actually worked out well, they got a good price for me because I would have held to the bitter end holding out for $1399, which didn't happen and it actually bumped up a buck or so at the close. Saved me 2G's give or take. Good on em.

I'll tell you what Fidelity would have done though.... they won't call ya.... they'll just void your puts even if they are in the money. Those things could have been $20 in the money.... and they would just void em like they expired worthless and the holder is shit outta luck. As well he should be if one can't be responsible for one's own trading.

Fidelity is the worse brokerage for a option trader or someone who trade's the weeklies because they will close out your position at the worst possible time unless you have enough money to buy 1000 Apple Calls or 100,000 shares of stock sitting around. They will not use any kind of limit order, they will get you the worse price possible so stay away from that Satanic Brokerage! Find a brokerage small enough that cares to email you or call before to speak about selling out your stock. I discovered if you contact Margin will Fidelity they will still screw you over and do as they please. With another firm they will give you up to 15:50 EST before selling out unless you have the capital to buy the common stock. Imagine Fidelity throwing a 1000 contract order of options at the Market Rate and the royal screwing, if they did that to a high volume trader imagine how their going to treat you! I say this for your own protection, avoid Fidelity please!

 

[donnap]

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 div. is priced in at the approx. delta if there were no div (just before ex-div). Delta is changed by the div factor.

Theoretically, the UL drops by the amount of the div. and that is priced out of the put by the factor of the post div. delta. So, in a theoretical world, there is no gain on the put.

In reality, the UL usually does not drop by the exact amount of the div. It fluctuates, as always.

And the put may fluctuate well beyond the ex-div. factoring, as well.