ETF distributions and option value?

Discussion in 'Options' started by hedgex, Oct 2, 2009.

  1. hedgex

    hedgex

    ETFs may distribute dividends and capital gains, which should lower the share prices. Because the option holder receives none of those, when that happens, the value of calls should drops and that of puts should rise. So would selling calls and buying puts before the ex-date be profitable?
     
  2. mike007

    mike007

    Dont think that you are the only one that knows this. Its no secret and they adjust prices accordingly.
     
  3. its priced into the options already