Impact of dividend on stock Call Option

R

raj_hpking

Well-Known Member
#1
#1
Hi,

I tried to find out the answer of "Impact of dividend on stock Call Option" by searching in google. But didn't understand properly. So, best place is ask to experienced traders in traderji, to get answer in simple words.'

I have bought one lot of TATASTEEL AUG 280CE at price 3.70rs. Now, it is trading at 4.20rs. TATASTEEL is having result announcement date on 11-Aug-2015 and dividend date (rs 8 per share) on 12-Aug-2015. So, if I hold CALL till 12-Aug will it price come down like stock's price? What is the best decision, sell it after result or hold it?
 
B

brajeevn

Member
#2
#2
Hi, I understood that if dividend is given, the valuation of the stock decline due to some money hold by companies flows to share holders hand.

Rajeev
 
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