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Well specifically if you get called now you have only 65 cents before transaction costs. Furthermore a dividend paid quarterly doesn't equal additional profit without appreciation in share price equal to or greater than the dividend.
Your first sentence is correct. Exactly what I represented. Now answer the question I asked mathjak.
Your first sentence is correct. Exactly what I represented. Now answer the question I asked mathjak.
The dividend doesn't represent any profit and I've explained it a couple times now. If you have another question or simply don't understand let me know what you are unclear on
The dividend doesn't represent any profit and I've explained it a couple times now. If you have another question or simply don't understand let me know what you are unclear on
If the stock is trading anywhere above cost basis+transaction costs dividend represents a profit in this trade. Are we talking semantics here?
If the stock is trading anywhere above cost basis+transaction costs dividend represents a profit in this trade. Are we talking semantics here?
It would only continue to be above the cost basis with share appreciation since it's a fact that the stock price is adjusted down exactly by the amount of the dividend. So when you stated each quarter added to the profit because of the dividend you received you are entirely incorrect, you would as I stated need share price appreciation equal to or greater to the dividend to have additional profit for that quarter. We aren't talking semantics but rather exactly how things work, maybe you misspoke in your profit statement
It would only continue to be above the cost basis with share appreciation since it's a fact that the stock price is adjusted down exactly by the amount of the dividend. So when you stated each quarter added to the profit because of the dividend you received you are entirely incorrect, you would as I stated need share price appreciation equal to or greater to the dividend to have additional profit for that quarter. We aren't talking semantics but rather exactly how things work, maybe you misspoke in your profit statement
So here's a scenario for you. You know the trade. Stock is currently trading at 33.60. It is called away on 10/31/18 with the stock trading at 31.00. 4 dividends of .49 have been received. Stock is therefore DOWN .64 adjusted for dividends. What is the profit on the trade?
It's irrelevant to your erroneous prior statement.
Edit: you know I did miss it here. Because of the deep itm call the price drop doesn't matter until the share price goes below the strike. I was incorrect
Edit#2 how often do you clear a quarter with deep in the money calls without getting called before ex? Seems unlikely for them to hang out there quarter after quarter. I know 90%+ of the time if I'm short itm calls, especially deep I get assigned before ex
Last edited by Lowexpectations; 10-31-2017 at 06:35 PM..
It's irrelevant to your erroneous prior statement.
Edit: you know I did miss it here. Because of the deep itm call the price drop doesn't matter until the share price goes below the strike. I was incorrect
Edit#2 how often do you clear a quarter with deep in the money calls without getting called before ex? Seems unlikely for them to hang out there quarter after quarter. I know 90%+ of the time if I'm short itm calls, especially deep I get assigned before ex
Your experience is very different from mine, especially if the call has an expiration date that is at least several quarters away. My experience is that the call is not usually exercised until the last ex-date before expiration.
Your experience is very different from mine, especially if the call has an expiration date that is at least several quarters away. My experience is that the call is not usually exercised until the last ex-date before expiration.
I've never written a year out or more. For me that's far too conservative and capping way too much appreciation so that's why I asked how many quarters you make it
Your experience is very different from mine, especially if the call has an expiration date that is at least several quarters away. My experience is that the call is not usually exercised until the last ex-date before expiration.
In this situation for both, if you have deep ITM calls, where the DIV yield is in excess of the premium or even matching it you're probability to get called away is very high. T doesn't really have DIV yield high enough at first glance to worry about it, but the deeper the calls go ITM, it can become so.
Also, the premium cost is the MOST insulating factor, someone would have to pay for all that time to call away the shares. Not saying T doesn't have news come out or go through something and it can easily become worth it for someone to assign.
What is the net affect of the dividend ON MY TRADE in each instance?
per share the effect is if you had 100 shares and the stock paid no dividend then on 1/5 you have 3360.00 compounding for you .
scenario 1 you have 49.00 dollars in pocket and 3311.00 compounding for you going forward.
if no dividend was paid you would have had 3360 still compounding going forward
.
scenario 2 49 dollars in pocket 3200 compounding for you .
if no dividend 3249 compounding for you
scenario 3 49 dollars in pocket 3500 compounding
if no dividend 3549.00 compounding going forward .
not sure why you are asking this , it is simple math ? the dividend payout just reduces what you have working for you in that investment by an equal amount
Last edited by mathjak107; 11-01-2017 at 03:30 AM..
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