GREY:SXRZF - Post by User
Post by
PeterPiperon Dec 03, 2010 11:55am
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Post# 17795969
Options
OptionsI have a pile of them, both December and January. I do not understand how the upcoming dividend has not affected the premium. This is making my decision of whether to sell or exercise them by ex-dividend time much easier.
For example, I have some January $4.50s which I paid 90 cents for before the dividend was announced. Currently, the bid/ask for them is $1.06/$1.15. This makes no sense to me, as the underlying is higher plus the $1.06 dividend. So let's say the pps is $6.00 on the 7th. Unless option writers get desperate I would expect to get around $1.50 per option, a profit of 60 cents. If I exercise them, however, my cost per share will be $5.40. I will also be getting the dividend, making the effective cost $4.34. The stock price would have to plummet pretty badly for me to lose out.
Also, I have lots of $5.00 options, which I will also exercise. My $6.00 January strikes I will likely just hold.
Comments are welcome.
Piper