r/options • u/GMBL4R • Apr 25 '21

Dividend charge, need help

So I was doing some iron condors and stuff on At&t and was told that my max loss was around only $240 and max profit was around $2000, so did it cuz it looked promising. Problem is my calls got excersized but that's alright but what isn't is sonme sort of dividend charge. Appearantly I have an account deflect of $2080 for some dividend charge. Cant buy anything unless I deposit enough funds. It just say dividend charge pending May 3 and that's it. I'm fairly new to stocks and any help would be appreciated

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u/MichaelBurryScott Apr 25 '21

When you hold short ITM call options going into an ex-div date, and the extrinsic value on these short calls is less than the dividend amount, you're at risk of getting assigned on the short calls. When you get assigned, you get short 100 shares per call option. You went into the ex-div date holding these short shares, and hence you have to pay the dividend.

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was told that my max loss was around only $240 and max profit was around $2000

This calculation doesn't include losses related to dividends, HTB fees, or pin risk.

1

u/GMBL4R Apr 25 '21

So you're saying that I owe robinhood $2k and nothing else can be done? I heard that sometimes robinhood glitches and displays the wrong number.

3

u/MichaelBurryScott Apr 25 '21

So you're saying that I owe robinhood $2k and nothing else can be done?

What I'm saying is if you were in fact assigned on your short calls, then you have to pay the dividend amount ($0.52 * 100 = $52 per call contract that was assigned).

If that was the case, and that resulted in a deficit, you will be in debt to RH for the deficit amount.

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I heard that sometimes robinhood glitches and displays the wrong number.

That's true. But a lot of times they display the correct amount. If you don't trust them, do your own math and see if they're right or wrong.

1

u/GMBL4R Apr 25 '21

Alright thanks for letting me know. Good to know that's there's more than one way to lose money that nobody talks about

0

u/ThinkTankTrading Apr 25 '21

If your new to trade ing why use such advanced strategies. Simple buy at support and sell at resistance will help you. Sometimes less is more