Hi Ron, RE: "What you gain on the dividend, you lose on the stock"
That part I knew. If the cash is in the company's bank account or the shareholders, it's essentially one in the same, doesn't matter where it resides - its already been accounted.
RE: "On ex-div, strike prices on existing contracts will decrease $3"
Okay, this is what I didn't know. So rebalancing will occur in the strike price, not the premium.
So, that would mean, if you take Jan 2007 strike 22.5 $8, then ex-div that should be Jan 2007 strike 22.5-3= 19.5 $8, correct?
If a dividend is small, say 10 cents, doesn't it get rebalanced through the premium price, rather than the strike price? i.e. why when Intel doesn't pay dividend, doesn't the strike price get adjusted?
(Side comment: I prefer Intel retains their cash for fabs instead of dividends.)
Regards,
Amy J |
