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/biz/ - Business & Finance

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1289045 No.1289045 [Reply] [Original]

So whats to stop me from buying a dividend stock the day before it pays out and selling it the next day for free money?

>> No.1289049
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1289049

>>1289045
Absolutely nothing. But the value of the stock goes down the exact amount of the dividend on the Ex Dividend date.

>> No.1289063

well of the dividend is like 0.30$ per share what guarantees do you have that the next day the stock value will be the exact same? As the other guy said, they're most likely to drop just because the dividend has been paid so recently

>> No.1289072

>>1289049
If this is always true then you can sell a naked call and buy a put on the ex dividend day and profit off a high dividend paying stock


Op, there's a strategy to profit off of this with optiona but you need alot of capital. I calculated if I wanted to do it with Phillip Morris, I'd have to put up about 8500 to make about 40 dollars after taxes and fees assuming all went well. This amounts to a 171% annualized return, however, it is inherently as you're putting up alot of money to make very little but in a very short period of time.

>> No.1289083

>>1289049
Lol no it doesnt

>> No.1289085

>>1289045
taxes are what fuckings stops you
/thread

>> No.1289172
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1289172

>>1289083
Yes it does. Read and learn.

http://www.fool.com/investing/dividends-income/2015/05/30/understanding-ex-dividend-dates.aspx

>> No.1289177

>>1289172
>the market may account for that dividend

Here's what you wrote:

>the value of the stock goes down the exact amount of the dividend

Lol it's like your brain hates itself

>> No.1289179

>>1289045
Taxes
also the price gets readjusted
so do orders

>> No.1289188

>>1289177
go ahead and lose your money
you're not trolling anyone
lol

>> No.1289226
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1289226

>>1289177
You need to reread that final sentence of the highlighted text very carefully.

Also, I recognize this is probably a troll thread, but why pose a question if you've already got it all figured out? Do you really think there is such a thing as 'free money', as you said in your OP?

>> No.1289253

>>1289085
What's a TFSA (Canada)
Or Roth IRA (US)
Or ISA (UK)

Don't tell me you play stocks with the taxman's hand in your pocket.

>> No.1289477

>>1289045
Because they don't tell you the date until they announce it. And you must have owned that stock before they announce it by a couple days.

>> No.1289492

>>1289477
Not true

>> No.1290401

>>1289045
There is no prohibition on buying before the x-dividend date.