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  • wtffinance wtffinance Jun 7, 2011 12:47 PM Flag

    Losers - sellers yesterday, b4 ex-div

    In these cases it could be worth to buy some Puts for insurance. I didn't play LO long post-dividend. Got the 105 Puts for a 10x return. If one was long, the 105 Puts could have greatly offset the loss from the sell off, or one could have made money from it. In the case of FTE, if I had a significant holding I would have bought the 20 puts for insurance.

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    • let's do the math.

      Strategy was sell yesterday @ $22.22 , buy today @ $21.33
      1000 shares sold yesterday = $22,200
      today you buy $22,200 @ $21.33 = 1041 shares

      Those who did not follow strategy are worth $21,320 today.
      Plus dividend $1,160 come July 7 (less 25% foreign tax = $870)
      = $22,190

      Strategy is psychologically ahead but July 7 the div is paid.

      Strategy = $22,200
      Holders thru ex-div = $21,320 plus div July 7.

      We will return to this after July 7.