OptionsAcademy

A dividend is a cash payment that a company makes to its shareholders. Many stocks pay dividends quarterly or monthly.

How It Works

Apple pays a $0.25 quarterly dividend. If you own 100 shares, you get $25 quarterly.

Impact on Options

Call Options: Slightly lose value on ex-dividend date. The stock drops by roughly the dividend amount.

Put Options: Slightly gain value on ex-dividend date.

Early Assignment Risk

If you sell a call and the stock has an upcoming dividend, the call is more likely to be assigned early (before the ex-dividend date). The buyer wants to be assigned to collect the dividend.

Trading Strategy

• Covered Call Sellers: Sell calls on non-dividend paying stocks, or accept early assignment
• Stock Buyers: Buy dividend stocks; hold through ex-dividend to collect payment
• Earnings: Dividends often announced with earnings; can affect options pricing

Dividend Dates to Know

• Announcement Date: Company announces the dividend
• Ex-Dividend Date: Last day to own stock and collect dividend
• Record Date: Official date you're recorded as owner
• Payment Date: When dividend is paid

Related: Dividend Yield, Early Exercise, Covered Call