When is the last day to hold the stock to get paid the dividend?

S

StockApprentice

I'm having difficulty figuring out how long I would have to hold a stock to be paid the dividend.

Is it really as simple as buying the stock on the in-dividend day (the day prior to ex-dividend) and selling it on the following day (ex-dividend)?

Please forgive me I'm trying to garnish all of the information I can, but none of the literature online that I've seen has been very specific. I've checked out
http://en.wikipedia.org/wiki/Dividend#Dividend_Dates
http://www.sec.gov/answers/dividen.htm

I'm really not sure what the point of the 'Record date/Date of Record' is. Unless it has to something to do with the settlement date..

If you prefer, maybe it's easier to answer which of the following scenarios will result in a dividend payment.

1) Buy the stock prior to ex-dividend date and hold through the date of record.
2) Buy the stock prior to ex-dividend date and sell the stock the following business day on the ex-dividend date.
3) Buy the stock prior to ex-dividend date, sell calls against the position, all of the shares are called away after the close.


Any information anyone would be willing to offer would be most appreciated. Thanks for your time.
 
Quote from StockApprentice:
----how long I would have to hold a stock to be paid the dividend.
----Is it really as simple as....
----maybe it's easier....
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There's no "free money" with what I believe you are thinking of doing. Otherwise everybody would already be doing "it". :(
 
Quote from nazzdack:

There's no "free money" with what I believe you are thinking of doing. Otherwise everybody would already be doing "it". :(
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I tend to agree. But can you please share what you think I'm pondering and why it probably won't work?

I'm trying to prove to myself why what I'm thinking is too difficult to do rather than just assuming it. I, of course, could always execute my ideas to determine their viability. I was just curious as to anyone else's experience.

thanks for your input!
 
Quote from StockApprentice:
----please share what you think I'm pondering....
----why it probably won't work?
----I'm trying to prove to myself....
----I could execute my ideas to determine their viability.
More...
1) The stock, on average, will decline by the amount of the dividend on ex-dividend day.
2) Dividend "surprises" tend to be expected.
3) The options will "discount" the dividend as it approaches.
4) There's no "free money" with dividend plays......otherwise traders could earn gazillions of dollars in a risk-free manner. :)
 
Quote from nazzdack:

1) The stock, on average, will decline by the amount of the dividend on ex-dividend day.
2) Dividend "surprises" tend to be expected.
3) The options will "discount" the dividend as it approaches.
4) There's no "free money" with dividend plays......otherwise traders could earn gazillions of dollars in a risk-free manner. :)
More...

I thank you for your time. I don't entirely agree with you, but appreciate your input.

If you or someone else could elaborate on how an option is 'discounted' that would be helpful.
 
Quote from StockApprentice:

I thank you for your time. I don't entirely agree with you, but appreciate your input.

If you or someone else could elaborate on how an option is 'discounted' that would be helpful.
More...

the stock exchange does it. the day a stock trades ex dividend it means exactly what it says. the next day it will open ex or less the dividend.
if a stock closes at 50 and pays a $1 dividend when it opens the next day it will trade at 49 and the $1dividend will be kept seperate until payment date when it will show up in your account.
 
Nike goes exdividend tomorrow.

I think this screenshot validates that at least someone (with a sizeable bankroll) agrees with me.

This is a screenshot of April 2011 Options. Notice the HEAVY call volume on the DITM calls.
 

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Quote from StockApprentice:

But can you please share what you think I'm pondering and why it probably won't work?
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LOL! This is one for the "Classic Posts" list.

(What you're pondering, son, is making money from dividend capture. And why it won't work is because 50,000 other people this week alone have pondered the same damn thing.)

P.S. There is no free lunch.
 
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