Is there a limit type order that takes into account ex-dividends?

Discussion in 'Order Execution' started by Saltynuts, Jan 11, 2020.

  1. Let's say I'm looking to buy a stock on a dip. So the stock closes at $16. I put a limit order at $15.75 for the next day. However, I was not aware that the stock was going to go ex dividend the next day, to the tune of a $.50 dividend. So the stock drops $15.50 via the ex-dividend, and I bought in at anywhere from $15.75 to $15.50, although if I had known the stock was going ex-dividend my limit order to achieve my buy on the dip strategy would have been $15.25.

    Is there a limit order (or something similar) which will specifically take the drop in stock price via the ex dividend into account and adjust accordingly?

  2. tiddlywinks


    Ex-div is not the only thing that (can) affects price on any given day. Could be other news/events etc... some offsetting and others additive to Ex-div pricing.

    At best you could hope for a pop-up reminding that the ex-Div pricing may be imposed. This would be a feature of your brokerage. I have never seen such a feature.
  3. I am looking for a similar order type but one that is buy the best price so that I make a profit tomorrow
    TooEffingOld likes this.
  4. R1234


    it should automatically adjust unless you specify DNR (do not reduce)
    nooby_mcnoob likes this.
  5. d08


    Not really. He uses yesterday's data to put a limit for the next day. That day's dividends are only reflected after close.

    To OP: DIY, coding required. I keep a dividend database from different sources, merge and then forward adjust any signals for the upcoming day.
    guru likes this.
  6. guru


    Interactive Brokers will cancel your order when there is stock split, or when the dividend exceeds 3%:
    The GTC order type allows traders to pinpoint in advance levels at which they would like to enter or exit the market. GTC orders will generally 2 be canceled automatically under the following conditions:

    • If a corporate action on a security results in a stock split (forward or reverse), exchange for shares, or distribution of shares.
    • If the company issues a dividend where the rate exceeds 3% of the prior day's closing price.
    • If you do not log into your IB account for 90 days.
    • At the end of the calendar quarter following the current quarter. For example, an order placed during the third quarter of 2011 will be canceled at the end of the fourth quarter of 2011. If the last day is a non-trading day, the cancellation will occur at the close of the final trading day of that quarter. For example, if the last day of the quarter is Sunday, the orders will be cancelled on the preceding Friday.
    • Orders that are modified will be assigned a new "Auto Expire" date consistent with the end of the calendar quarter following the current quarter.
    qlai likes this.
  7. guru


  8. So there is no possible way to place a limit offer, good till cancel or good for 90 days, that drops the price of the offer automatically in the case of a dividend? That just seems so weird, as the vast majority of time people with limit orders would want to auto drop the price of the offer by $.30 if the stock all of a sudden became ex dividend by $.30. :(
  9. guru


    The article I posted above states otherwise and explains that yes, brokers will drop the price, which is what you wanted. So it may depend on the broker.
  10. guru


    I do the same btw, apply dividends each morning. Though I don’t leave orders hanging overnight. Otherwise brokers may indeed adjust the price on GTC orders. I remember having an order adjusted for me at IB a while ago when I was using GTC orders, but it might’ve been an adjustment to an option strike for a stock with very large dividend (the order might’ve been for an option). Don’t remember details.
    #10     Jan 11, 2020