SPY: What Happened to My Dividend?

The S&P 500 ETF (SPY) recently went Ex-Dividend and a major firm neglected to exercise a sizable amount of In-The-Money calls to capture that dividend for its customers.  The SPY pit traders here at CBOE tell me that it is normal to see about 8% of the call volume go unexercised.  With this painful oversight we saw that figure jump to 24%.

This is a good time to review some important dates when it comes to dividends:

Declaration Date: The Company Board of Directors publicly announces that it will pay a dividend.

Ex-Dividend Date: The date the underlying will trade without the dividend.  You must exercise your call option the day before this date to receive the dividend.

Date of Record: The date the company verifies the shareholders that are entitled to receive the dividend.

Payment Date: The day the company issues the dividend to shareholders.  Dividends may be paid in cash or stock.

Key dates of any kind (Earnings, Employment, Fed…) should always be logged as part of an investors/traders overall plan.  With a dividend, the Ex-Dividend date, whether you are long or short an option, is the key date to be aware of.

An old fashioned paper calendar works fine for me.

Peter B. Lusk