SPY is the world’s largest Exchange Traded Fund with $240 billion in assets under management. Stockholders as of the ex-dividend date are eligible for the dividend. Interested in receiving this windfall? Make sure you buy the stock by the day prior. These dates are typically the third Friday of every quarter. Next date: December 15, 2017. The dividend is declared on this date and paid on January 31, 2018.
Assuming the market is opening flat, a security’s price will typically drop by the amount of the dividend. Of course, if the market is strongly up or down at opening, this will also influence the market. I like to keep a check on volatility as we approach ex-dividend dates as prices do expect a drop. Remember too, you only receive dividends if you own the stock, so if you’re long on options, you do not own the stock, hence you receive no dividend. If you’re short puts or calls when it goes ex-dividend and you don’t own any of the underlying security, then nothing direct happens. Options are influenced by the dividend but you would neither receive nor owe any dividend if you do not own the shares.
SPY dividends can be substantial. June/17 dividend was $1.18311 and September’s came in at $1.23457.
In checking seasonal charts on SPY, the last five years indicated a drop in prices around this ex-dividend date… something to keep in mind, even in a strong bull market.
Hugh Grossman, Head Trader at Day Trade SPY.
Hugh Grossman is the founder and Head Trader at DayTradeSPY and uses his vast experience to teach his methods to make consistent daily gains trading SPY options. Join Hugh in his interactive Trading Room to see how he regularly pulls in the profits!
Want to learn how to day trade SPY options? Join us in Hugh’s Trading Room – a program designed to fast track you to success. You will be able to watch Day Trade SPY traders, Hugh and Alex, daily in an interactive setting. Subscribe here.