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How do dividends impact the price of derivatives like options and futures?
Dividends affect the pricing of derivatives in the following ways:
Futures Contracts: The futures price is adjusted to account for the dividend payout, as it reduces the underlying stock price.
Options Contracts: Since the stock price drops by the dividend amount on the ex-dividend date, this affects option premiums. Call options may see a decrease in value, while put options could see a relative increase.
Futures Contracts: The futures price is adjusted to account for the dividend payout, as it reduces the underlying stock price.
Options Contracts: Since the stock price drops by the dividend amount on the ex-dividend date, this affects option premiums. Call options may see a decrease in value, while put options could see a relative increase.
Last updated: 8 Months Ago
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