Market traps- Series 2 (Dividend and options premium)

Hi All ,

Once upon a time on 16 th March 2017

"Mr Ram Nene bought coal india long strangle , ie. Buy 290 call at 6.75 and Buy 290 put at 2.75" , The spot price was around 289 level.

Next 3-4 days price went up 4-5 bucks around 296 , call option premium was nicely trading at 7 Rs and suddenly the premium on options dropped by 3 Rs , even though spot price was same.Something was missing.Booked the losses.

Crazy stuff , Call options trading at discounts to spot price.

On doing some research came to know that coal india out of blue informed exchanges on Tues/ Wednesday that they will have Board meet on Sunday and declare a dividend on Monday .

Conclusion : Watch out for payout of sudden dividend by govt PSU in March month.


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