BEWARE OF DIVIDEND DATES!
You might want to avoid trading calls surrounding a stock's ex-dividend date!
$MDLZ goes exdiv TOMORROW 30-Dec!
You might want to avoid trading calls surrounding a stock's ex-dividend date!
$MDLZ goes exdiv TOMORROW 30-Dec!
https://twitter.com/swingstrades/status/1476346776022097923
But the Flow shows a lot of call volume coming ahead of the ex-div date!
- You might be seeing market makers that are looking to capture as much of the dividend as possible, who are looking to exercise deep ITM call options.
- You might be seeing market makers that are looking to capture as much of the dividend as possible, who are looking to exercise deep ITM call options.
But why do MMs trade pre-div dates?
- To capture as much of the dividend as possible, two market makers enter into an agreement to trade deep-in-the-money call options back and forth with each other on the day prior to the ex-dividend date.
- To capture as much of the dividend as possible, two market makers enter into an agreement to trade deep-in-the-money call options back and forth with each other on the day prior to the ex-dividend date.
- They take advantage of the fact that individual options traders will fail to exercise their deep in-the-money call options in order to collect the corporate dividend payment themselves.
- Market makers who engage in the dividend trade strategy step in and capture the dividend instead, while distorting volume with millions of contracts.
SOURCE:
elitetrader.com/et/threads/opt…
SOURCE:
elitetrader.com/et/threads/opt…
And if you want to know more about this and the strategies surrounding exdiv, please join the Discord and get involved there!
Tons of information and knowledge at your fingertips:
discord.gg/unusualwhales
Tons of information and knowledge at your fingertips:
discord.gg/unusualwhales
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