Long calls & puts
What happens to a long call option’s extrinsic value when a stock goes ex-dividend?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
When a stock goes ex-dividend, its price typically drops by roughly the dividend amount, which can reduce a long call's value since calls do not receive the dividend payment that benefits actual shareholders.
How it works
This dividend-related price adjustment is anticipated by the options market and is generally already reflected in pricing models before the ex-dividend date arrives, particularly for known, scheduled dividends.
An example
A $1.00 declared dividend on a $50 stock may cause an approximate $1.00 price adjustment, slightly pressuring call premiums and boosting put premiums relative to a no-dividend scenario.
Risk & limitations
OCC disclosures note unexpected or special dividend announcements can cause sharper, less predictable adjustments to option values than regular scheduled dividends.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.