TheTradingReport

Wynn Win

Written by Daily Options Report - 11/09/09

So if you were sitting at the WYNN stock table, you got a nice little windfall today as they announced a special $4 dividend to holders of record November 19th.

How does it effect options you ask?

Well, the usual guideline is that if they pay out more than 5% of the stock value in some form or another, then they will adjust the options to include the special dividend. In other words, if you own the November or December 60 calls, you get the $4 dividend whenever you exercise them. Likewise, if you own some ITM puts, you owe the dividend. What will likely happen is that after WYNN goes ex-dividend, they’ll list a new class of WYNN options that will not include it, in which case you will have two classes of WYNN trading side by side.

Long story short, move along, nothing to see here. There’s no “dividend play” in options.

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Wynn Win

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Daily Options Report

Adam Warner is the author of Options Volatility Trading: Strategies for Profiting from Market Swings due for release in October 2009 from McGraw Hill. He co-wrote the options column on Street Insight from spring 2003 to spring 2005, and is currently Options Editor at Minyanville.com.

When not writing, Adam is a proprietary option trader with Addormar Co, Inc. He traded as a member of the American Stock Exchange from 1988-2001, and in several off-floor locations since then.

Adam Warner graduated Johns Hopkins University with a degree in Economics.

Options Volatility Trading: Strategies for Profiting from Market Swings

"Options Volatility Trading educates novice to intermediate investors on the nuances of the volatility index (VIX), the psychology behind it, and the best strategies to employ during dramatic market shifts. It provides a solid grounding in historical volatility patterns, distortions created by market noise, and how to use tools other than VIX."

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