Put or put option dividend


Put or put option dividend


The stock price sold off sharply on those news, and I decided that this was an opportunity to add to my existing position. Since I am low on investable funds, I decided to sell some puts on British Petroleum. I posted this over the metatrader 4 administrator download el, and had a reader ask me exactly what that means.

As a result pput this question, I am going to try and respond to this request.A put is pu options contract, that allows the options buyer to sell a number of shares at a given price at a given date in the future. The number of shares per each options contract is 100. People buy put options in order to protect themselves from a decline in prices, dividehd thus they want to limit their losses. Those who purchasSelling put options (deep in the money) is an alternative way of purchasing shares of a company.

More specifically, when pug sells deep-in-the-money puts, it is equivalent to owning the corresponding shares as long as the stock price does not exceed the strike price of the options on their expiration date. The strategy put or put option dividend certain advantages and suits well the profile of most investors that are interested in high-dividend stocks. It is particularly suitable for individuals that have their dividends taxed (see table at the end).The most important advantage is that the investor receives in full the time value of the options, which will be greater than the put or put option dividend if the strike price is properly selected.

The payment of dividends for a stock has puh important impact on how options for that stock are priced. Stocks generally fall by the amount of the dividend payment on the ex-dividend date. This impacts the pricing of options. Call options are less expensive leading up to the ex-dividend date because of the expected fall in the price of the underlying stock. At the same time, the price of put options increases due to the same expected drop.

The mathematics of the pricing of options is important for investors to understand in order to make informed trading divivend. Conversely, a put option loses its value as the underlying stock increases and the time to expiration approaches. optionn Normally a dividend is only considered extraordinary if it is at least 10% Join other Individual Investors receiving FREE personalized market updates and research.Join diviidend Institutional Investors receiving FREE personalized otpion updates and research.Join other Financial Advisors receiving FREE personalized market updates and research.

All stock quotes on this dividendd should be considered as having a 24-hour delay.Certain financiaCash dividends issued by stocks have big impact on theiroption prices. This isbecause the underlying stock price is expectedto drop by the dividend amount on the ex-dividend date.Meanwhile, options are valued taking into account the projected dividends receivablein the coming weeks and months up to the option expirationdate. Consequently, options of high cash dividend stocks have lower premiumcalls and higher premium puts.Effect on Call Option PricingOptions are usually priced with the assumption that they are onlyexercised on expiration date.




Put option or put dividend

Put option or put dividend

Put or put option dividend



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