Myer Chadstone, page-9

What happens if the dividend gets Cancelled ??

IMO its actually bullish for the share price for 2 reasons

1) the 37 million per year of cash remains in Myer cashflow on its books.

2) Part of the tools that funds have to move the price is in a hard to understand yet profitable Arbratige trade.

That means Selling a Put warrant, buying the call warrant for a net credit, and shorting the stock.

That means the trader is delta neutral regardless if the share goes up or down. Because they sold the put warrant for a higher price than what they bought the call warrant for = net credit, and it costs next to nothing to short the stock itself to make the exposure to the trade neutral.

The only trade we see is on the actual stock, but 2 separate warrant trades happened to make the short trade have no net exposure.

When a stock has a due ex date for a dividend, the put and call warrants price in the dividend to be 2c lower on ex date, so the Arbratige trader can capitalise on this , possibly making 2c for zero risk.

But if Myer cut the dividend, the Warrant market wouldnt forward price the stock at 2c lower for a dividend, So its possible that this trade isnt vaible any more.

Its even possible that the reduction in short position is because some traders may be expecting a dividend cut.

In conclusion to the above, there is alot more going on behind the scenes than what us basic investors can do or understand.

The History of the Myer Chart has had it swing wildly up and down, only to reverse 30% up or down for no understandable reason.

My explanation is a guess, but chart history shows Myer bouncing after the dividend. Im only guessing as to why.