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Corrections Corporation of America Message Board

  • gehnen_k gehnen_k Sep 16, 1999 2:23 AM Flag

    Adjusting

    When trading ex dividend (which is 0,6 $) the
    stock is worth 0,6 $ less, because the buyer will not
    get paid this dividend.
    Adjustment in the way is
    used it means that calculating the change in the stock
    price yahoo factors in the value reduction of the ex
    dividend status. That is way at the close of today yahoo
    shows at a closing price of 12 3/8 a stock price change
    of just -1/8 although the stock closed at 13 1/8 on
    the day before. Sorry that I caused
    confusion.
    Klaus

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • Another interesting wrinkle on the ex-dividend
      adjustment comes into play if you sell covered calls on your
      position, especially if you had September $12 1/2s in
      play.

      The adjustment means that these calls are no longer
      in the money and may well not be called away Friday
      at expiration. Which is certainly preferable to the
      PZN shareholder, since you can sell at that price
      anyway if you wish, or you can just sell new calls for
      even more income in addition to the dividend
      yield.

      Of course, the astute BUYER of these calls would
      have exercised his option the day BEFORE PZN went
      ex-dividend, and recieved the dividend. Of some sixty
      contracts I have outstanding, exactly ONE was
      exercised.

      Darn... 100 less shares of PZN.

 
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