Sifugann
Newbie
- Messages
- 7
- Likes
- 0
Let's start off with my scenario.
I bought COST calls last week. As you know, this was the same period where they announced a $7.00 dividend. I watched prices soar and my profits accumulate. This morning before the market opened, I was looking at the historical records of other equities and noticed a drop on dividend date. I was curious and eventually found the definition of an ex-dividend date (the stock will usually drop in price by the amount of the expected dividend). I looked at the pre-market and verified that COST dropped 7.00 dollars confirming with today's open.
As I logged into my trading account, I had a perception that my profit turned into an immediately loss. However, to my surprise :clap: my call did not lose it's value. I looked at the COST's option spread and noticed something that I've read (new market wizards) but have been unable to place my finger on it. Spread irregularities.
The price of COST is at 98.88.
Strike: 97.5 | Bid: 8.65 Ask: 8.85
Strike: 98.0 | Bid: 2.25 Ask: 2.40
Strike: 100 | Bid: 6.40 Ask: 6.55
The ask and bid prices are not uniformly synced in a cascading order, and usually is. I know the price discrepancies may be due to the dividend, however it doesn't settle well with my gut.
For anyone with option spread experienced, what is your take? :smart:
I bought COST calls last week. As you know, this was the same period where they announced a $7.00 dividend. I watched prices soar and my profits accumulate. This morning before the market opened, I was looking at the historical records of other equities and noticed a drop on dividend date. I was curious and eventually found the definition of an ex-dividend date (the stock will usually drop in price by the amount of the expected dividend). I looked at the pre-market and verified that COST dropped 7.00 dollars confirming with today's open.
As I logged into my trading account, I had a perception that my profit turned into an immediately loss. However, to my surprise :clap: my call did not lose it's value. I looked at the COST's option spread and noticed something that I've read (new market wizards) but have been unable to place my finger on it. Spread irregularities.
The price of COST is at 98.88.
Strike: 97.5 | Bid: 8.65 Ask: 8.85
Strike: 98.0 | Bid: 2.25 Ask: 2.40
Strike: 100 | Bid: 6.40 Ask: 6.55
The ask and bid prices are not uniformly synced in a cascading order, and usually is. I know the price discrepancies may be due to the dividend, however it doesn't settle well with my gut.
For anyone with option spread experienced, what is your take? :smart:
