Options and Dividends?

[rapidex]

Are there any implications for trading Australian options in regards to dividends? (i.e: if you have either calls or puts for a security which pays dividends, do you have any obligations in regards to those dividends?)

Thanks.

 

[wayneL]

Are there any implications for trading Australian options in regards to dividends? (i.e: if you have either calls or puts for a security which pays dividends, do you have any obligations in regards to those dividends?)

Thanks.

Not if you don't own, or are short the underlying share.

However be aware that the option price will compensate for any dividend, basically negating the price change when the share goes ex-dividend.

 

[sails]

Are there any implications for trading Australian options in regards to dividends? (i.e: if you have either calls or puts for a security which pays dividends, do you have any obligations in regards to those dividends?)

Thanks.

Hi rapidex,

The quick answer is no dividend obligation if you are long calls or puts, however, there is an obligation to pay the dividend should you find yourself assigned short calls on x-div morning.

As Wayne has pointed out, the dividend is factored into option pricing.

Cheers

 

[rapidex]

Thanks Wayne and Sails > much appreciated.