short dividend stocks on day of record.

[kr81]

Hello,

This is my first post. I hope to develop a network of trading enthusiast through this web site. I love trading. I have failed twice in the past. Now I am determined to paper trade until I can prove to myself that I can consistently pull money out of the markets.

Here is my question. Have any of you tried to short a dividend stock on the day of "record?" If not do you think the idea may have any merit?

:idea:

 

[Rhody Trader]

I presume that your intention in shorting the stock on the day of record is to capture the reduction in price which takes place when the stock goes ex-dividend. On the face it sounds like easy money, right?

Not so.

When you are short you are responsible for paying that dividend to the owner of the stock from which you borrowed. Unless the stock goes down more than the dividend, you lose.