Thursday, September 10, 2009

RE: [TheOptionClub.com] Calendars and Dividends

 

Hi RFH

I asked that question to TOS here is the answer.

ASKING: Think or swim

QUESTION: If I am holding puts on DIA, will I be exposed to paying the dividend?
ANSWER: From Rodrigo: no, the dividend risk on short in the money call.

Ken

--- On Thu, 9/10/09, Kenneth Ginsberg <ken_ginsberg@yahoo.com> wrote:


From: Kenneth Ginsberg <ken_ginsberg@yahoo.com>
Subject: RE: [TheOptionClub.com] Calendars and Dividends
To: OptionClub@yahoogroups.com
Date: Thursday, September 10, 2009, 9:37 AM

 

If your ONLY WMT position is as stated, then something is wrong. The only way you should be debited the divvy is if you were actually short the stock itself. Have you checked to see if your short options had been exercised and you missed it and you are now short WMT instead of still in the spread?

 

Ken

 

 

From: OptionClub@yahoogro ups.com [mailto:OptionClub@ yahoogroups. com] On Behalf Of drrobhansen
Sent: Thursday, September 10, 2009 11:14 AM
To: OptionClub@yahoogro ups.com
Subject: [TheOptionClub. com] Calendars and Dividends

 

 

I'm in the process of learning how to successfully trade calendar spreads, and currently have a position in WMT. I'm short the Septembers and long the Octobers at the 50 and 52.5 strikes. I checked my account and noticed that my cash balance was debited yesterday for a dividend that Walmart paid. I was totally unaware that this type of spread was subjected to dividend payments. Could someone be kind enough to elaborate on how and why this happens?

Thanks,
RFH


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