crystallizing of dividends for derivatives ..., page-5

Hi Gyro, the BSOPM theorum values Puts only slightly higher than Calls and is explained as compensation due to the tendancy of Stocks generally falling faster than they rise.

I suspect this really is simply to explain a short side bias to the mathematics rather than by real design.

Traders sometimes complain that Bought Puts seem to lag initially compared to Calls given identical Underlying price movements ...

My third point (original post) was really quesioning why would you even consider Exercising a stock with a $30.00 Strike when you can simply purchase them in the Market at $27.87 and thus be entitled to the upcoming dividend.

I am not sure I understand you last paragragh ... in the real world, Equity(trading) Warrants are seldom Exercised anyway. Settlement is usually by cash.

The issues regarding dividends/exercising etc relate to Option/FPO strategies and are somewhat removed from the Equity Warrant Market which are basically 'bought/sold' financial instruments with the difference between respective FAIR VALUES representing one's profit/loss.

This is not to say that Warrants are never Exercised or that some people don't trade with the view to ultimate share ownership but it is not mainstream due to the high Imp/Vols which equate to substantial premiums for the privelege.

Cheers ...


This is only my view ... read the red stuff.