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pjani06 (29.86)

short sales & dividends - timing: when can you avoid payment?

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March 03, 2009 – Comments (5)

I hope someone in the CAPs community could help answer the question;

If one short sells a stock that pays dividends, at what point can the short seller start the position to avoid payment of the dividend?

the timeline of events is ex-dividend date, record date, and actual date of dividend payment...

ex date   ----   record date   -----   actual date of dividend payment  ----- 

              ^here?                 ^here?                                               ^or here?

 

5 Comments – Post Your Own

#1) On March 03, 2009 at 9:19 PM, anchak (99.86) wrote:

The stock will adjust its price ( to the dividend amount) the moment it goes ex-dividend - thus to avoid possible arbitrage - you are liable to the dividend payment in close out of your transaction.

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#2) On March 03, 2009 at 9:23 PM, herztical (28.31) wrote:

(long) To get div, buy before ex date

(short) avoid div, sell before ex date

http://www.sec.gov/answers/dividen.htm

 I messed this up with GS recently; totally forgot about the dividend (I was short).  Still made money on short, but a oversight nonetheless

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#3) On March 03, 2009 at 9:27 PM, herztical (28.31) wrote:

...sorry avoid div cover before ex date

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#4) On March 03, 2009 at 10:34 PM, pjani06 (29.86) wrote:

how about to start a short a position?  what if you are looking at a stock that you want to short and you see the board just declared a dividend today, and will go ex-dividend next week, record date, and then the actual dividend payment date.

as a short seller, at what point is the earliest you can enter without having to have any worry about the dividend?

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#5) On June 07, 2009 at 6:25 AM, MGDG (36.49) wrote:

You can sell short after the ex-dividend date. The pay date doesn't effect your short sell.

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