What happens to an option’s value when the company pays stock dividends? Consider a put option to sell 100 shares of a c
Posted: Sun May 08, 2022 10:16 am
What happens to an option’s value when the company pays stock
dividends? Consider a put option to sell 100 shares of a company
for $45 per share. What happens to the put option if the company
declares a 20% stock dividend? Discuss how the terms of the option
will change – if it changes. If not, discuss how it affects the
value of the option. (Note: I am referring to stock dividends, not
the usual cash dividends on stocks.)
dividends? Consider a put option to sell 100 shares of a company
for $45 per share. What happens to the put option if the company
declares a 20% stock dividend? Discuss how the terms of the option
will change – if it changes. If not, discuss how it affects the
value of the option. (Note: I am referring to stock dividends, not
the usual cash dividends on stocks.)