Day Trading Stocks & Futures

[vivektrader]

Exactly. In normal dividend scenario underlying wil come down and future will follow which is negative for future position holder. But in case in special dividend it may not be negative to future holder as the cost price if future will be reduced to the extent of special divided.

But what I see in that Angel website description from the image I am not sure if 5% on market price is correct. Because usually it used to be some percent on face value not market value.
But I don't know if there is any change in rules.
Also if 5 % on market value then current tcs cant be special dividend.

Have booked the position, will reenter on Monday.
Thanks

 

[Dr. Jan Itor]

^^ 2% of market value... mtm adjust hoga monday ko 75 se...

 

[mohan.sic]

I searched whole nse site and found nothing.
anyways , thanks for clarifying

thats a good query ....

 

[mohan.sic]

^^ 2% of market value... mtm adjust hoga monday ko 75 se...

yes at present it is 2% on market value of underlying. Not 5%. SEBI revised it from 5% to 2% of market value in june-july 2022.

 

[mohan.sic]

Have booked the position, will reenter on Monday.
Thanks

So 2% of appx 3300 ( appx closing price the day before dividend declared) is around Rs.68 and cost price of futures holder will be reduced to that extent. If this is correct, then future holder will make good money as his cost will come down to 3232 on monday record date and if price remains at this level without falling.
Lets see how it works...

 

[vivektrader]

So 2% of appx 3300 ( appx closing price the day before dividend declared) is around Rs.68 and cost price of futures holder will be reduced to that extent. If this is correct, then future holder will make good money as his cost will come down to 3232 on monday record date and if price remains at this level without falling.
Lets see how it works...

My understanding after all the discussion is that, if I had the same position in cash, the dividend payout correction in cmp would not matter as I would be entitled to dividend in February even if I exit on Monday. However if I had carried on with my position in futures till Monday, the futures price would have corrected by the payout amount but my initial buy price would have remained same, so in effect a loss. Lets see what happens on Monday open.

 

[vivektrader]

But the above looks stupid if I decide to go short in futures on Friday in the hope of “certain” correction in price on Monday. That cant be true too.

 

[travi]

But the above looks stupid if I decide to go short in futures on Friday in the hope of “certain” correction in price on Monday. That cant be true too.

Adjustments in case of Corporate Actions (nseindia.com)

This link says 2%. it used to be more before but everything is explained here. Took a while to find it but TCS dividend is extra-ordinary case.

but my initial buy price would have remained same, so in effect a loss. Lets see what happens on Monday open.

So now from 16th Jan, the previous MTM will adjust by 75 so Derivatives contract will not in effect have any price shock.
its as if your buy entry is inr. 75 lesser. same with options, the strike prices will be adjusted.

 

[travi]

HDFC Bank Q3 net profit rises 19.9% to Rs 12,698 crore, asset quality stable (moneycontrol.com)

Udta HDFC

 

[mohan.sic]

My understanding after all the discussion is that, if I had the same position in cash, the dividend payout correction in cmp would not matter as I would be entitled to dividend in February even if I exit on Monday. However if I had carried on with my position in futures till Monday, the futures price would have corrected by the payout amount but my initial buy price would have remained same, so in effect a loss. Lets see what happens on Monday open.

yes the futures price could correct (along with spot) by the payout amount but your initial buy price would not remain same. It should be " actual buy price - special dividend" So in effect your cost price would come down. That is if your actual entry is 3320 and special dividend is Rs.68 then they mark your entry as 3252.