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How your “brilliant”, “free money,” “LITERALLY CAN’T GO TITS UP!!!” SHEN dividend play is going to go tits up.

Ok, look. I know. I was as excited as everyone else about a shitty telecom stock with fucking Shenandoah in the title that is paying out a fucking $18.75 PER SHARE dividend.

Then I did the math. “Oh look, I can buy 100 shares for $55. Then I can buy a $55 put for $300. I’ll get the $18.75/ share dividend ($1875), exercise the put contract and stick that theta cuck that sold me this contract with 100 shares and make him eat the loss. Easiest $1575 I’ve ever made.

Hell, why am I only doing one of these? Let’s LEVER TF UP, it’s only a $1k buying power hit for each one! I’ve found the fucking money printer bitches!!!!!!

Wrong.

The issue with the special dividend is that not only is the share price going to be adjusted down by the amount of the dividend, your put contract strike price will be adjusted down as well. By the amount of the dividend. So that 55 strike put you bought is now a $36.25 strike.

It’s (probably) not going to vaporize your account the way that a bunch of short box spreads can (praise be to 1ronyman, patron saint of free money), but it’s not going to be the massive winner you think.

[fidelity article on special dividend adjustments](https://www.fidelity.com/learning-center/investment-products/options/contract-adjustments)

What do you think?

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25 Comments

  1. Puts on Shen is like fucking arbitrage tbh. Shit is going to sell off instantly after dividend and any potential Fed scare before or after will tank the stock even further.

  2. The sale was announced back in February. The price for the divided was already backed into the stock price, it had no reason to run up the way it did last week.

    I bought puts because I think the business that was sold off is significantly more valuable than the business that shen is moving forward with and the run up.

  3. Yeah, I was going to make that play, except just the puts… Then someone informed me about contract adjustments and I said nope! I mean the company is going to go out of business in quick order anyway, they were forced to sell their mobile business at a discount to sprint/tmob, and it was the only part of their business making money. They are severely underpositioned to compete in domestic broadband in a market with several other established broadband suppliers.

    Oh well, if they’re still headed south after the dividend payment I’ll probably toss a few puts in, but not before the adjustment

  4. You can’t put a good Shen down

    He dashes away with his taunt, becomes auto-immune, has shields, and teleport to an ally across the map while also shielding said ally

    All that while using energy instead of mana

    Shen is busted

    Maybe you can shut Shen down in lane but he pays dividends late game

  5. Here’s my thinking you…
    1. Buy before 7/13
    2. Hold until payout, 8/2
    3. Set limit sell immediately on close

    It won’t dip BEFORE 8/3 right? Gotta hold it to get the dividend. So if you buy shares before ex-dividend date then sell immediately after……

    Am I regarded? Will this work?

  6. Yea sorry, something that’s been around forever (dividends) does not hold some key play no one else has ever seen. The plays no one else have ever seen would be shit that would break the brains of most dudes here. Shit like “dividend high, buy shares, buy put” ain’t it.

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