# Does the XJO decline due to upcoming ex-div dates?



## pbuzby (15 August 2014)

Hi All

As we know ex-dividend season is upon us with CBA, TLS and WES going ex-div next week.  Collectively these 3 make up just over 16% of the entire ASX 200/XJO index.  On ex-div day typically each share drops by its dividend amount meaning each of these shares will drop by aprox 2.6% of their just-prior-to-ex-div value.  Multiplying this by their respective % representation in the XJO equates to approx 0.44%.  Theoretically does this mean the XJO will drop by a like % next week and if so, more importantly (I'm an XJO option trader), will this drop affect XJO call/put option prices??  
Cheers,  Paul


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## DeepState (15 August 2014)

pbuzby said:


> Hi All
> 
> As we know ex-dividend season is upon us with CBA, TLS and WES going ex-div next week.  Collectively these 3 make up just over 16% of the entire ASX 200/XJO index.  On ex-div day typically each share drops by its dividend amount meaning each of these shares will drop by aprox 2.6% of their just-prior-to-ex-div value.  Multiplying this by their respective % representation in the XJO equates to approx 0.44%.  Theoretically does this mean the XJO will drop by a like % next week and if so, more importantly (I'm an XJO option trader), will this drop affect XJO call/put option prices??
> Cheers,  Paul




XJO is a price index.  The value of XJO will fall as constituents go ex-div.

If expectations for future dividends and other Greeks are maintained, it will not affect the option prices.  The options are European and cash settled.


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