Selling vertical call spread before ex-dividend date

JackRab said:
Puts are all based on the ex-dividend price... so that would be Spot-Dividend... That's probably why you think they have a huge extrinsic value, which they don't.
Extrinsic value will not increase.. because why would it? There is nothing to be gained here.

Re-analyze with spot - dividend and it will be more clear to you.

As for ITM calls, some are based on the current Spot, and those will/should be exercised before dividend. ATM and OTM calls are all based on Spot-Dividend as well, like the puts... maybe with a little bit of extra premium because of the exercise option you have before dividend.

Don't exercise your puts before dividend!!!

Uhm, IB says dividend SPY is 1.141 USD at JUN 16 '17... but that's probably not correct... I would say SPY has the ex-date at/around the same dates every time, probably quite stable dividends, since they reflect the dividends from the S&P500.
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Hi
Yes, but I want to make an observation.
If the dividend is not known, how can the puts be based on the ex-dividend price?
At most it's one approach. And it could be a play here. But no for ones who like a non risk strategy.
http://www.nasdaq.com/symbol/spy/dividend-history

So, nobody knows if Spy announces the dividend some days before the ex dividend date.

I think the price of puts could increase as we approach to the ex dividend date. We'll see.

And you can be sure I won't exercise puts before ex-dividend date, mainly because I sold puts.
For sure my calls will be early assigned. I susspect I am playing the same game as Sle.

Regards
 
The dividend is more or less known... dates are usually around the same time, and since SPY is derived from S&P500 the dividend reflects S&P500 dividends. Which taken all together don't change that much in a short period of time.

So if the last 2 years the quarterly divs were 1 dollar... it will be around that this time, perhaps a bit higher.

It's how things work, if you know that usually SPY pays out 1 dollar dividend mid June.. than anyone trading SPY options without accounting for that would be an idiot....

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See... they've always had the ex-date between 14th and 20st... It's probably even in the docs, since SPY is an ETF, which I assume has less flexibility to shift things around...

The date of announcement isn't interesting, it's about the ex-date. They can announce the total dividend the day before, or 2 months before... doesn't matter when the ex-date stays the same.
 
stepandfetchit said:
Another twist: (This has not been vetted, so consider with doubt). If the underlying is trending down already, it "could" be possible the value of the underlying is being held up only by some waiting for the Dividend, then plan to dump. If so, NAT could also be interesting! (Ie.. something like BUY 17MAR $8 strike PUT. SELL the PUT back Thur. -- very short term trade)
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I have not been able to monetize this via options. Too slow and stupid I guess.

How I trade these is, wait for low of ex-div date to be broken by the equivalent of the dividend amount.

Sell the underlying at that price and capture the move of at least the dividend amount.

i.e. low on ex div= 50.00/div = .45/ sell at 49.55 looking for 49.10 in a day or 2
 
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