I'm relatively new to options and am trying to understand the rules for adjusting for cash dividends. As best I can tell, prior to Feb 2009 the rule is best summarized by this excerpt from http://www.optionseducation.org/resources/literature/options_central/2004_summer.pdf "Q: I OWN AN OPTION ON A COMPANY THAT RECENTLY ANNOUNCED A ONE-TIME CASH DIVIDEND. HOW DOES THIS EVENT AFFECT MY OPTION? A: As a general rule, no adjustment is made for ordinary cash dividends or distributions. A cash dividend or distribution by most issuers will generally be considered ordinary unless, on declaration date, it exceeds 10% of the aggregate market value of the underlying security outstanding." The post Feb 2009 rule from http://www.optionsclearing.com/components/docs/market-data/infomemos/2010/sep/27648.pdf "... a cash dividend or distribution will be considered ordinary (regardless of size) if it is declared pursuant to a policy or practice of paying such dividends on a quarterly or other regular basis. Dividends paid outside such practice will be considered non-ordinary. OCC will normally adjust for non-ordinary dividends unless the amount is less than $12.50 per contract." Is this correct? The 10% rule would certainly have made bullish positions riskier. Would a regular yearly dividend be considered ordinary under the current rule? By specifying "quarterly or other regular basis" they seem to be implying that less frequent regular dividends will be treated as special dividends.