if i go short with a bullet at the close on X dividend date ... and buy at the open the next day when the stock opens down the dividend.... is that a profitable trade??? or am i missing something does the bullet cost change on dividend dates?? if the bullet costs cheaper then the dividend .
In a short sale you do not get the dividend as long as the purchaser bought it from you BEFORE the ex-dividend date [in fact,as you are short the stock, you OWE the dividend and I believe it is kept seperate from the price of the bullet] - if she bought it from you on its ex-dividend date or after, you receive the next dividend payment. I think you are off by one day in your statement above. Farrell talks about this in one of his books...What is interesting is that some companies pay the dividend with shares instead of cash... BTW, did you try to PM me? nitro
if you buy a bullet you cant owe a dividend wouldnt it be factored in because of the long/ short option.. you would be flat i think?
whats the correct way to capture a dividend...can someone explains some dividend plays and straigies thanks in advance.