Is it possible to short-sell pre-dividend shares for profit?

Question

For example, say BT is about to pay its dividend, the market-price WILL adjust to compensate for this, so is it possible to profit from this fall by placing a sell order on a spread-betting account, or will they factor the fall into their spread?

Answer 1

they will factor the fall into the spread. They don't allow arbitage opportunities like this. I thought I can buy a put on a prediviend payout stock that has a large dividend but that doesn't work either. If you do short-sell a stock, you have to deduct the dividend and pay it to the owner of the stock that allowed you to borrow his stock for short-selling.

Answer 2

If you sell a stock short, you have to pay the dividend to the person who loaned you the stock. Since the stock price usually falls a little less than the value of a dividend on the ex-dividend date, you will probably end up losing money with this strategy.

Answer 3

When you short sell a stock, the dividend that is paid on the stock goes to the person owning the stock. Since you sold the stock and did not own it, you have to pay the person whom you sold the stock to the dividend. It come right out of your account. Hence it is a wash.

Answer 4

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Answer 5

i'm in simple terms addressing the how they can lose money section. actual, once you promote a inventory short, you're promoting a inventory you do not own and want to purchase it later at a low fee because it is going down. If the inventory is going up, you need to purchase it at a larger value and also you lose money.