On the declared ex-date of a dividend, the price will fall by the opening of the market that morning so the company can adjust its share price with the dividends it is paying to investors.
With this being so predictable, would shorting a small amount of shares the day before and then closing out on them the next day be profitable? Has anyone tried this?
thanks =)
2007-02-19 15:31:14 · 2 answers · asked by rk88 1 in Business & Finance ➔ Investing
That strategy does not work. If you are short a stock on the ex-date, you have to pay the dividend. Your broker will automatically deduct the cash from your account to pay it.
2007-02-19 17:03:18 · answer #1 · answered by zman492 7 · 0⤊ 0⤋
Unfortunately you can't "have you cake and eat it too". If a client shorts a stock before ex-date, and covers the short on ex-date after the price has been adjusted, the client will be held liable for that dividend.
2007-02-21 19:36:28 · answer #2 · answered by jak80_1999 2 · 0⤊ 0⤋