From Theory To Practice - February 11, 2021 - Understanding Dividend Risk
Whenever we have a Short Call in a dividend paying stock, we always want to be aware if we are at risk of assignment on that Short Call due to the upcoming dividend. With any short options, there is always a risk of early assignment. However, that risk can increase in the event of an upcoming dividend payment, just as we saw with our IBM position. So today, we use what happened in IBM as a real-time example of how to assess the dividend risk on any position.