Ex-Dividend Strategy!

cd173

Active member
209 1
Hello Everyone

I've noticed that on ex-dividend days the shares involved gap down from the previous days close.
eg, today 10/3/04 HBOS, AAL, RIO amongst others all gapped down.

Is it not possible to short ex-div stocks the afternoon before and cover sometime over the course of the following morning?
Is this a viable profit making strategy or to soon to tell?
I know this has been discussed before on these boards, so I'd be interested to hear opinions.

I tested it last week and produced by conservative estimates a 100+ point gain. Today's results produced the same sort of figures. I'm working off the D4F SB platform and only trading those with a couple of points spread.

Any views?

Thanks
Chris
 

def

Member
82 1
You'd have to pay the dividend if you were short. Thus it is not a winning strategy as the stocks only open down (all things being the same) by the amount of the dividend.
 

cd173

Active member
209 1
Magnet

Thanks for the info, I'll check it out.
 

barjon

Legendary member
10,674 1,796
cd

I think the futures discount the dividend and the rolling
cash would adjust for it. From the other angle it's surprising
how often a dividend does not get fully reflected in the price, so
futures which discount the full dividend are often a good bet.
 

cd173

Active member
209 1
Hello All

So am I right in thinking that if you were short stock XYZ and it fell by 10 points at the open the following morning, the SB co would not give you the 10 points as a gain?
Does this apply to rolling cash bets as well as the quarterly contracts

Thanks
C
 
 
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