Trading options dividends ura


Trading options dividends ura


Some stocks pay generous dividends every quarter. You qualify for the dividend ifyou are holding on the shares before the ex-dividenddate.Many people have triedto buy the the shares just before the ex-dividend date simply to collect the dividendpayout only to trading options dividends ura that the stock price drop by at least the amount of the dividendafter the ex-dividend date, effectively nullifying the earnings from the dividenditself.There is, however, a way to go about collecting the dividends using options.

On the day before ex-dividend date, you can do a covered write by buying the dividendpaying stock while simultaneously writing an equivalent number ofdeep in-the-moneycall options on it. The call strike price plus the premiums received should be equalor greater than the current stock price.On ex-dividend date, assuming no assignmenttakes place, you will have qualified for the dividend.

While the underlyCash dividends issued by stocks have big impact on theiroption prices. This isbecause the underlying stock price is expectedto drop by the dividend amount on the ex-dividend date.Meanwhile, options are valued taking into account the projected dividends receivablein the coming weeks and months up to the option expirationdate. Consequently, options of high cash dividend stocks have lower premiumcalls and higher premium puts.Effect on Call Option PricingOptions are usually priced with the assumption that they are onlyexercised on expiration date.




Options dividends ura trading

Options dividends ura trading

Options dividends ura trading



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