Options and dividends

Discussion in 'Strategy Development' started by GlobalFinancier, Apr 23, 2006.

  1. Only when a special dividend is above 10% of stock price, then the option's strike price will be lowered etc.
    But say we have XYZ with a stock price of $50, giving out a $2.5 dividend to shareholders tomorrow. We could buy the puts at $50, and sell after the dividend gap tomorrow.
    Now, I know probably hundreds of thousands of people have thought of this so what don't I see?
    Thanks in advance for any helpful replies...
  2. Also look at DEC 28 topic on WFMI special div...more info