So on my vacations in Detroit, I got this serious sounding VM from Optionshouse. SPY was going ex-dividend the next day and my option positions were in trouble. I had 90 minutes before market close and I was on a cruise ship away from the shore with intermittent cell connection.
What happens on an ex-dividend date: Stock falls by the amount of the dividend, calls on the stock fall by the same amount, puts rise. However, if you own the stock, you get the dividend and stock falls by the dividend amount - so net nothing happens to you. If you own the call option, it falls by an amount while you do not get any dividend. The call option is an option to acquire the stock (and not any dividends). Thus, being long on calls means you loose major value on the ex-dividend date.
Thus, I had to get to the shore and call my broker. I did so around 30 minutes before market close on Thursday. Closed all my positions at market price (which means I lost major money there) and came out in cash overall.
This week has been great for me, apart from some value lost in the close. I am up around $2,900 - will put up the graphs tomorrow, when I start a new spread.
Market assessment:
FB, ZNGA are both up. My bottom call was right and I will close out tomorrow when the Greece new further lifts these stocks. AAPL options are also dark green by now. Maybe time to sell, but not sure now.
What happens on an ex-dividend date: Stock falls by the amount of the dividend, calls on the stock fall by the same amount, puts rise. However, if you own the stock, you get the dividend and stock falls by the dividend amount - so net nothing happens to you. If you own the call option, it falls by an amount while you do not get any dividend. The call option is an option to acquire the stock (and not any dividends). Thus, being long on calls means you loose major value on the ex-dividend date.
Thus, I had to get to the shore and call my broker. I did so around 30 minutes before market close on Thursday. Closed all my positions at market price (which means I lost major money there) and came out in cash overall.
This week has been great for me, apart from some value lost in the close. I am up around $2,900 - will put up the graphs tomorrow, when I start a new spread.
Market assessment:
FB, ZNGA are both up. My bottom call was right and I will close out tomorrow when the Greece new further lifts these stocks. AAPL options are also dark green by now. Maybe time to sell, but not sure now.
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