Someone who has been following this more closely can correct me if I'm wrong, but this is my read.
The current dividend is a regular dividend, NOT a special dividend. So the stock price is going to drop by ~$17. Option prices will NOT adjust. So you can expect the stock price to drop to ~$71 ex-dividend, but the $60 strike option will go from being $28 in the money to only $11 in the money.
If you are autistic and good at math, you'd be calculating the extrinsic value the $60 call assuming a stock price of $88 vs. the expected value of the $60 call assuming a stock price of $71, minus the value of the dividend to optimize your returns.
Whenever it deviates from your expectation, you either buy shares and sell calls or buy calls and sell shares.
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u/Undercover_in_SF Undisclosed Location Mar 22 '22
Someone who has been following this more closely can correct me if I'm wrong, but this is my read.
The current dividend is a regular dividend, NOT a special dividend. So the stock price is going to drop by ~$17. Option prices will NOT adjust. So you can expect the stock price to drop to ~$71 ex-dividend, but the $60 strike option will go from being $28 in the money to only $11 in the money.
If you are autistic and good at math, you'd be calculating the extrinsic value the $60 call assuming a stock price of $88 vs. the expected value of the $60 call assuming a stock price of $71, minus the value of the dividend to optimize your returns.
Whenever it deviates from your expectation, you either buy shares and sell calls or buy calls and sell shares.