Finance

Have Finance Questions? Ask a Financial Expert Online.

Ask an Expert,
Get an Answer ASAP!

Finance

1. Should the option prices change when a company

Customer Question
surprisingly eliminates its dividend but...
1. Should the option prices change when a company surprisingly eliminates its dividend but its share price stays the same?2. Give two reasons why "short interest rebate" would be a negative interest rate.
Submitted: 27 days ago.Category: Finance
Show More
Show Less
Ask Your Own Finance Question
Customer reply replied 27 days ago
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call.
Customer reply replied 27 days ago
Let me know if you need more information, or send me the service offer(s) so we can proceed.
Answered in 18 minutes by:
11/17/2017
Financial Professional: Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 27 days ago
Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Finance
Satisfied Customers: 895
Experience: Managing Director
Verified

Welcome to JustAnswer. My name is ***** ***** I will be able to assist you today.

Stocks generally fall by the amount of the dividend payment on the ex dividend date. This impacts the pricing of options. Call options are less expensive leading up to the ex-dividend date because of the expected fall in the price of the underlying stock. At the same time, the price of put options increases due to the same expected drop.

____

Both call and put options are impacted by the ex-dividend rate.

____

Short Sale Rebate Fee

When you borrow money from a lending institution, you agree to pay interest on the loan based on certain conditions such as the loan amount, availability, etc. Similarly, when you borrow shares of a stock, you may be charged interest based on the underlying lending conditions of the security in the short sale - primarily the availability of shares. This fee is referred to as the short sale rebate fee

____

The availability and perceived volatility of shares also factors into the settlement of a short sale. Stocks that are hard to borrow have a higher likelihood of being unavailable on the settlement date and incurring a forced buy-in throughout the time you hold the short position

___

The fees are either ETB (Easy to borrow) or HTB (Hard to borrow).

When trading HTB stock, brokers may charge an additional % of interest (also called negative rebate,)

Therefore, two reasons why you would be charged an additional amount of interest would be based on the availability of the stock and the perceived trading volatility of the stock.

Ask Your Own Finance Question
Financial Professional: Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 27 days ago

If the company eliminates the dividend payment the option price will also change because the dividend is typically factored into the original pricing of the option premium.

I would be happy to answer any follow up questions you may have.

At the conclusion of our conversation please take a moment to accept the answer by rating the answer with three stars or more. Thank you!
Ask Your Own Finance Question
Customer reply replied 27 days ago
even eliminates its dividend, the option prices still changed?
Financial Professional: Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 27 days ago

Yes, because when the option was priced the dividend was priced in.

__

So when the dividend is eliminated, the option price changes to reflect the change in dividend.

Ask Your Own Finance Question
Financial Professional: Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 27 days ago

Also when the dividend is eliminated the price of the stock won't drop as it would if a dividend was issued.

Ask Your Own Finance Question
Financial Professional: Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 27 days ago

Yes, because when the option was priced the dividend was priced in.

priced meaning, the option price takes into account that the stock will issue a dividend. When this no longer happens the option price changes.

Was I able to clarify your question?

Ask Your Own Finance Question
Financial Professional: Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 26 days ago

Hello.

If you have no further questions please take a moment to accept the answer so I may be compensated by JustAnswer for my work!

Thank you

Ask Your Own Finance Question
Financial Professional: Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional replied 24 days ago
I would be happy to answer any follow up questions you may have. At the conclusion of our conversation please take a moment to accept the answer by rating the answer with three stars or more. A positive rating of five stars is always appreciated. Thank you!
Ask Your Own Finance Question
Ask Chad CFP ® Your Own Question
Chad CFP ®
Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Finance
Satisfied Customers: 895
895 Satisfied Customers
Experience: Managing Director

Chad CFP ® is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Rakhi Vasavada

Rakhi Vasavada

Financial and Legal Consultant

2,608 satisfied customers

Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years

Megan C

Megan C

Certified Public Accountant (CPA)

2,218 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

Manal Elkhoshkhany

Manal Elkhoshkhany

Tutor

1,919 satisfied customers

More than 5000 online tutoring sessions.

JKCPA

JKCPA

CPA

844 satisfied customers

Bachelors degree and CPA with Accounting experience.

Eric

Eric

Financial Manager

559 satisfied customers

Loan servicing, counseling and real estate expert. Foreclosure Expert and Financial Planner.

R. Klein, EA

R. Klein, EA

Accountant

480 satisfied customers

TurboTax Expert. QuickBooks Certified Pro Advisor

Dimitry K., Esq.

Dimitry K., Esq.

Attorney

332 satisfied customers

NASD Licensed Rep, 1997-2001, Business Attorney

< Previous | Next >

Related Finance Questions
I have a question regarding the upcoming taxes if I issue an
I have a question regarding the upcoming taxes if I issue an invoice now for a future service does it need to be with applied tax (this is now, before the vat is in power) … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,581 satisfied customers
Banking question: Two years ago I changed my sole
Banking question: Two years ago I changed my sole proprietorship to an LLC. I didn't realize that this is considered a "new business" and a new bank account must be created. So the bank found out and … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,581 satisfied customers
I have a business where I sell automotive supplies blind.
I have a business where I sell automotive supplies blind. Most everything I sell goes outta state. But the items that stay in Arizona I need to pay state taxes on. I tried to pay but the website aztax… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,581 satisfied customers
I am employed by a company that offers a 401k but
I am employed by a company that offers a 401k but participation is voluntary. The company contributes 3% of annual income to the plan. The vetting is by percentage with 20% being 2 years.Question: If … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,251 satisfied customers
Canyou give me advice on how to handle moving my in-law's
Canyou give me advice on how to handle moving my in-law's money to an interest bearing investment to pay for part of their nursing home (rest home) care? Their money is currently in accounts that are … read more
Chad CFP ®
Chad CFP ®
CERTIFIED FINANCIAL PLANNER TM, Professional
895 satisfied customers
No i am good. I made a deposit late, i forgot about it in
I made a deposit late, i forgot about it in the file cabinet.....i deposited it a month late. What should i do to explain … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,581 satisfied customers
I am to select between two education loans repayment
I am to select between two education loans repayment programs with lower monthly payments and accruing interest added to the principal. The '#1' is capitalizing the accruing interest annually, as the … read more
socrateaser
socrateaser
1,031 satisfied customers
Is it possible to over-contribute to a 401(k) plan? Since
Is it possible to over-contribute to a 401(k) plan? Since the beginning of 2017, I've been setting aside enough of my paycheck each month to reach the $18,000 maximum. However, I changed jobs a few mo… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
I am an only child and my mom is single - If she were to
I am an only child and my mom is single - If she were to quitclaim deed her house to me, I'm assuming I would take on her cost basis in the house. If that is the case, I fairly confident that her cost… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
I need accounting help to calculate annual profit for my
I need accounting help to calculate annual profit for my ecommerce business. A friend wants to buy it. I have the data, but I don't know how to best present it for use in determining my asking price a… read more
Emilee Weaver
Emilee Weaver
Controller
Masters of Professional Accounting
70 satisfied customers
If I have a loss from sales of business property (form
If I have a loss from sales of business property (form 4797), can I carry forward for the next year? For how long can I carry forward? Which line should be informed that on form 1040?… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am a micro business owner with major losses this tax year.
I am a micro business owner with major losses this tax year. I need to cash in my IRA (I'm only 40yrs old). Is it possible to minimize taxes on the early IRA withdrawal by making use of the business l… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
Second opinion] Weird situation. I moved from New Mexico to
Second opinion] Weird situation. I moved from New Mexico to Nevada this year. I got my new lease in Nevada middle of June. I physically moved my furniture out July 6. My lease ran out in New Mexico Ju… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
We formed an LLC to make a documentary film. We raised money
We formed an LLC to make a documentary film. We raised money with an IndieGOGO campaign. We have two questions. How should we account for the contributions to the LLC? Are contributions income and the… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,581 satisfied customers
Happy Holiday's to you. If an S Corp has two shareholders
Hey Lane,Happy Holiday's to you. If an S Corp has two shareholders and one of the Shareholders resigns, does that resigned shareholder still have to be involved in the tax return?Please advise.Thanks,… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Can a personal service corporation be elected to be tread as
Can a personal service corporation be elected to be tread as S- Corporation? if yes, what are the steps?… read more
Carter McBride
Carter McBride
LLM
72 satisfied customers
I have 2 Roth IRAs for my husband and I and we created an
I have 2 Roth IRAs for my husband and I and we created an LLC with professionally made up documents to own the LLC wiith our Roths. In the document it states we can buy and sell basically anything tha… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Can I deduct loan interest that was used to buy a house?
Can I deduct loan interest that was used to buy a house? What part of the return (1040) should I claim the deduction?… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x