The ex-dividend date (or "ex-date") is the last date you must own stock to receive the upcoming dividend payment.
Announcement: Company announces dividend
Ex-Dividend Date: Last day to own stock to get the dividend
Record Date: Official date you're recorded as owner (usually one day after ex-date)
Payment Date: Day you actually get paid the dividend
The stock price typically drops by approximately the dividend amount on the ex-dividend date. This is automatic—the exchange adjusts it.
Example: Stock at $100, $2 dividend → Stock opens at $98 on ex-date (assuming no other news).
Call Options: Lose value on ex-date (stock drops)
Put Options: Gain value on ex-date (stock drops)
Early Assignment Risk: If you sell calls before ex-date, they're more likely to be assigned early. The buyer wants to exercise before ex-date to collect the dividend.
If you sell calls on dividend stocks, you risk early assignment before you collect the dividend. This is a known risk of covered calls.
Related: Dividend, Dividend Yield, Early Exercise, Covered Call
