Dividend

A Dividend is a payment, usually in the form of cash, derived from a company's profits that is paid out to shareholders. 

Dividends can be scheduled to be paid out monthly, quarterly, biannually, as well as annually. Unannounced dividends are called Special Dividends. 

There are 3 key dates to track:

- The ex-dividend date: one business day prior to the record date (see below). All else equal, on a stock's ex-dividend date the share price will drop by the dividend amount. 

- The record date: the cut-off date set by a company to determine which shareholders are eligible to receive the dividend. Because of the T + 2 settlement system currently used those who wish to secure a dividend must own the stock by the close of business on the day before the ex-dividend date. 

- The payout date: the day the dividend is paid out.

Fictitious company ABC has an ex-dividend date of Friday, August 15. Those wishing to secure a dividend must own the stock by the close of business on Thursday, August 14. 

A stock whose ex-dividend date is the following trading session will have a currency emoji to the left of the ticker in the Unusual Whales flow feed.

It is not uncommon to see large amounts of ITM call activity take place on the day prior to the ex-dividend date. This activity is arbitrage and is NOT a directional trade. Click here for an in-depth white paper (PDF) on this activity.