What is "Dividend Accrual"

M

Martin Gale

A few weeks ago, I day traded MSFT and held LLY for a few days. Since then, my broker (IB) statement has shown "Dividend Accrual" for these two, payable on Dec 10. I literally owned them for a few days, and I am being assessed dividends equivalent to the number of shares times the payout.

I'll be out a few hundred bucks in this case, because I shorted LLY and lost, and now owe dividends. A few hundred bucks is no big deal in the big picture. But it *is* a big deal if I have to somehow factor potential dividends into my risk/reward calculations every time I want to put on a short term trade.

I've been day/swing trading for years, and I've never seen this. Is this sort of thing common? Is it because it is the end of the year? Is this an IB thing? What is going on here?
 
Lemme' ask yous this; If you were the "owner of record" on those days would you still be whining about receiving the dividend?

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Quote from Martin Gale:

A few weeks ago, I day traded MSFT and held LLY for a few days. Since then, my broker (IB) statement has shown "Dividend Accrual" for these two, payable on Dec 10. I literally owned them for a few days, and I am being assessed dividends equivalent to the number of shares times the payout.

I'll be out a few hundred bucks in this case, because I shorted LLY and lost, and now owe dividends. A few hundred bucks is no big deal in the big picture. But it *is* a big deal if I have to somehow factor potential dividends into my risk/reward calculations every time I want to put on a short term trade.

I've been day/swing trading for years, and I've never seen this. Is this sort of thing common? Is it because it is the end of the year? Is this an IB thing? What is going on here?
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everything else being equal stock opens lower by the amount of dividend the day that someone long is no longer entitled to receive the dividend. imagine a $10 stock with a $5 dividend.

hard to believe u have been trading for years.
 
hard to believe u have been trading for years.
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he is a daytrader..
OP-bottom line is very simple-if you long-you receive the dividend,if you short-you pay
 
Just make sure you aren't short on the record date. The company announces the date well in advance. Depending on your trading style it might be a bitch to ensure this with every short, but it will save you the monetary loss as in this case.
 
Quote from zdreg:

incorrect. there is no monetary loss. imagine a $10 stock with a $5 dividend.
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this bring us to another question-how do you report dividend accruals on your taxes?
you can't put negative number in dividends received :p
 
Gee, I wonder where Mister Gale, The OP, went!
Maybe he is stuffing his turkey with his foot after he gets it out of his mouth?
 
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