What happens to option pricing (not the call/put options - but the ones listed on ASX linked with shares) in the lead up to the company paying a dividend??
In the lead up to healthy dividends, share prices often increase as people seek to benefit from receiving the dividend. However I assume option holders don't get the dividend so does the option price rise with the share price or does it factor in the subsequent fall when they go ex-div
For example if share price is currently $1.10 and options (say ex @ $1.00) are $0.12, if shares typically rise before div payment - say a 10 cent div taking them to 1.20 - will the options rise 10 cents as well - say to $.22 - or will they factor in the subsequent ex-div fall?
The only options I have bought have been on non-div paying mining stocks - does anyone have an example of options of div paying stocks?
thanks in advance...