Say you're holding a short put against a stock and that stock pays a dividend. Upon paying a dividend, the price of that stock would decrease by the amount of the divided paid but would the price of the short put you're holding increase in value (therefore losing you money as you are short the put)?
Or are planned future dividends already taken into account when a put is originally priced (i.e. if a put has 150 days to expiration and the underlying stock is scheduled to pay 2 dividends during that time, will the price of the put would be higher in price than it would otherwise be if the underlying stock did not pay a dividend (higher in price because after taking into account future dividends, the actual stock price is actually "lower" that what it appears?
Submitted August 31, 2021 at 12:06PM by traderlmd https://ift.tt/2Y3SRq4
