No. of Recommendations: 0
The only thing wrong in your example is that options do not adjust in strike price for regular dividends, only for extraordinary dividends.
I didn't say, or imply, that the strike price was adjusted. I simply said that the STOCK PRICE adjusted on the ex-div day, it was $30 before the dividend went ex, and it was $29 after it went ex. And, yes, special dividends are different, if they are large enough, the strike price is adjusted.
I chose this special case because the company began to distribute a regular dividend, not a special dividend. Just like Apple did 13 years ago.
The OCC adjudicates that the strike price drop by $2.00 to $18.00.
In this case (the special dividend), it may make a slight bit of sense to withhold taxes on the $2 unrealized gain. But I still think overall it doesn't make sense. In the end, when the option is sold or is exercised, the capital gain will be accounted for, and the usual taxes will be paid.
