Dividend mining

Discussion in 'Trading' started by rozar s'macco, Mar 25, 2009.

  1. GTS

    GTS

    Interesting but even if the stock did trade the next day down by the full amount of the dividend and not some percentage of it, I doubt long-term investors would go through the trouble of selling and re-purchasing their stocks to avoid the dividend. The commission cost and the extra trouble it would cause at tax time would not be worth it.

    Whenever I've tried dividend capture plays I've always done so in my SEP IRA account so I didn't have to worry about tax consequences.
     
    #31     Mar 29, 2009
  2. spindr0

    spindr0

    I'm hung up on semantics when you're suggesting pseudo-arb be substituted for arbitrage? LOL.

    How do you know that a "true" textbook arb is rare or non-existent? Have a source? I don't know that at all. I do know that there are different kinds of arbitrage and in the option arena where I have some familiarity, they occur every day (conversions and reversals). I've even found some myself and I'm just a lowly retail trader :)

    As for execution risk, that has as much to do with your proposed dividend/tax arbitrage is as commissions do.

    And as for shorting an index future to hedge some of the price risk, you're confusing hedging with arbitrage (minimizing the risk versus risk free). Or have we just mutated to another topic?
     
    #32     Mar 29, 2009
  3. Excellent post! Few people understand that stocks have a commodity side most of the time.
     
    #33     Mar 29, 2009
  4. Do not waste your time with him. He does not understand the thoughts in your posts. You have shown that if the drop were to take place as he thinks, they were be an edge. He did not get it.
     
    #34     Mar 29, 2009
  5. spindr0

    spindr0

    Riskfreetrading, despite all the mocking of your ridiculous ideas and double talk by so many ET posters, it's good to see you crawl from under your rock and carp at others. I've missed you!

    I really like it when you simultaneously start different chains, one saying go short and another saying go long and then when one of them succeeds, claiming analysis ability.

    You're my internet troll hero !
    (swoon)
     
    #35     Mar 29, 2009
  6. while you girls are fondling each other,m $$$$$ is being made capturing dividends.

    you know, the old joke, if there's a $100 bill on the floor don't bother to pick it up, if it was really there, it would already have been taken.
    [​IMG]
     
    #36     Mar 29, 2009
  7. I think you would be right talking about Mom & Pop investors, but for institutions the decision is different. Low trading costs, very low marginal tax prep costs for another couple of trades, offset by a large dollar amount the tax savings would apply to.
     
    #37     Mar 30, 2009
  8. You are right! And I suggest you complain to the managers of all merger arb funds, stat arb funds, vol arb funds, risk arb funds, etc. about their false advertising, that is an outrage that should not be allowed to continue.

    So for the true no-risk arb trades you do, are you really guaranteed to get all legs filled simultaneously with no chance of getting hung out there if a connection goes down or a big trade beats you in on one side? Do you always use european options instead of americans when the PCP no-arb relationships call for them? If so I am impressed (at least if you do this with any meaningful size as a retail trader), but if not then small risk is not no-risk, I call psuedo-arb on you! LOL!

    Finally I disagree that execution risk is a big part of the dividend capture strategy, at least compared to the options strats you mention - your second leg can be in a very liquid index futures contract. BTW it is not MY div/tax arb strategy, I don't trade it and dividend capture is about as much of a secret as the yen carry trade.
     
    #38     Mar 30, 2009
  9. Thanks for the compliment but right now arguing with him is a nice break from the work I should be doing!
     
    #39     Mar 30, 2009
  10. :p

    PS: i like reading what you write. you are thoughtful.
     
    #40     Mar 30, 2009