Live: Friday, June 14, 2019

2:45 p.m. New York time

Decision time. Nothing to do with my trading rules, but IWM goes ex-dividend on Monday. If any of my short options are in the money, they could candidates for assignment.

Normally on the day a stock goes ex-dividend, it can be expected to show price decline by the amount of the dividend. If the price drop puts a short option in the money, it is more likely to be assigned, if the dividend is greater than the remaining extrinsic value (time and volatility value) of the option.

My IWM position in a short iron condor, with both short calls and short puts. The short calls have $159 strike, with an extrinsic value of $0.605, and the short puts a $140 strike, with an extrinsic value of $0.635.

IWM is now trading at $152.02, and the next dividend is expected to be between 40 and 45 cents. So the lowest I expect the ex-dividend drop to be is $151.57. At that price, my calls and my puts are both out of the money, the extrinsic value is well above the expected dividend, and so an assignment in unlikely.

Unless there’s a shockingly large price change between now and the market close, I shall hold my IWM iron condor through the ex-dividend date. The position is presently at 29% of maximum potential profit.

My other positions are all ending the week within their profit zones.

By Tim Bovee, Portland, Oregon, June 14, 2019


Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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