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

November, 2017

 

 

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