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What is Dividend?
Dividend A distribution of a company's earnings to shareholders. Dividends affect options pricing because call values decrease and put values increase as the ex-dividend date approaches. Early assignment risk increases for in-the-money calls before ex-dividend dates.
Complete definition
A distribution of a company's earnings to shareholders. Dividends affect options pricing because call values decrease and put values increase as the ex-dividend date approaches. Early assignment risk increases for in-the-money calls before ex-dividend dates.
Example
AAPL pays a $0.25 quarterly dividend. If you're short an ITM call before ex-div, you may face early assignment as the holder exercises to capture the dividend.
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ApexVol Terminal
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