Spyglass Resources Corp SGLRF

RE:RE:RE:goes ex dividend tomorrow buy today

[sanityseeker]

A dividend arbitrage trade like buying today and selling tomorrow should not theoretically work for a retail investor to Make a free profit. The reason being if there was a large enough opportunity for it to be profitable trade with the small scale trades and high transaction costs of a retail investor, it would surely be detected in the screens of institutional traders who could exploit and eliminate the opportunity in a much more profitable manner (their buying would push the pre-dividend price up to the point that the spread to be earned would not cover the transaction cost of the retail transaction cost). That logic would apply to a very liquid stock. In the case of sgl, the added risk associated with its low volume would make the benefits of the supposed free dividend outweighed by the downside risk of fluctuations in the price caused by other factors. Alternatively, in order to be sure you can enter and exit over the course of two days, you;d have to be willing to buy at the bid price and sell at the ask price. That disadvantage would likely override any potential advantage of being able to collect a dividend in addition what ever gain.or loss that may arise from holding the stock for one day.<br /> <br /> If the price does not drop by 0.0225 tomorrow, it will not contradict this argument, since it may only indicate that absent going ex-dividend the price might have gone up by 0.0225 for unrelated reasons.<br /> <br /> I am speaking theoretical, so anyone can prove me wrong by doing the math and showing that this strategy would have had a net profit if used over the last 12 ex-dividend dates. However, if you can show that this works, we are all fools for not being rich off the risk fee profits.<br /> <br />