Loading...
The first day a stock trades without the upcoming dividend. Buyers on or after the ex-date don't receive the dividend. Critical for short call holders — deep-ITM calls may be exercised the night before ex-div.
⚡
Key takeawayCheck ex-dividend dates before selling calls. If your short call is deep ITM and the dividend exceeds the remaining time value, expect early assignment the night before ex-div.
💡 Why It Matters
Ex-dividend is the most dangerous date for short call holders. If your short call is deep ITM and the dividend exceeds the remaining time value, the holder will exercise the night before to capture the dividend.
⚙ How It Works
The ex-date is set by the exchange, typically 1 business day before the record date. On the ex-date, the stock opens approximately dividend-amount lower. Buyers on or after the ex-date don't receive the dividend.
📋 Example
AAPL ex-div: April 10. Dividend: $0.75. You're short the $190 call (AAPL at $210). Time value remaining: $0.50. Since $0.75 > $0.50, the call holder exercises April 9 evening. You're assigned: shares called away at $190, no dividend.
⚠ Common Mistakes
Not checking the ex-div calendar on short calls. Set an alert for all short call positions 3-5 days before ex-div. If the call is deep ITM and dividend > time value, close or roll before the night before ex-div.
❓ FAQ
What is Ex-Dividend Date?
The first day a stock trades without the upcoming dividend. Buyers on or after the ex-date don't receive the dividend. Critical for short call holders — deep-ITM calls may be exercised the night before ex-div.
Why does Ex-Dividend Date matter for premium sellers?
Check ex-dividend dates before selling calls. If your short call is deep ITM and the dividend exceeds the remaining time value, expect early assignment the night before ex-div.
How does Ex-Dividend Date work?
The ex-date is set by the exchange, typically 1 business day before the record date. On the ex-date, the stock opens approximately dividend-amount lower. Buyers on or after the ex-date don't receive the dividend.
What are common mistakes with Ex-Dividend Date?
Not checking the ex-div calendar on short calls. Set an alert for all short call positions 3-5 days before ex-div. If the call is deep ITM and dividend > time value, close or roll before the night before ex-div.
Related Terms
60/40 Tax Treatment
The favorable tax split for Section 1256 contracts: 60% of gains are taxed at the long-term capital gains rate and 40% at the short-term rate, regardless of ...
Adjusted Option
An option whose terms have been modified due to a corporate action — stock split, special dividend, merger, or spinoff.
All-or-None Order
An order that must fill completely or not at all, but unlike FOK, it can wait in the book for a complete fill rather than canceling immediately.
American-Style Option
An option that can be exercised by its holder at any time from listing until expiration.
This is not financial advice. Read our full investment disclaimer.