Why buying NLOK puts won’t be a cash cow…

NLOK is releasing a special dividend of $12 for shareholders of record for the last week in January 2020. Hooray! We can expect the price of the stock to drop around $12 promptly after the dividend is paid.

So will PUT options at pretty much any strike price be a cash cow? 

Unfortunately, with this special dividend comes a special adjustment to the options contracts. The options contacts will be adjusted so each put carries -12/share in value. Bottom line, short the stock and be on the hook for the dividend payable to shareholders.

NLOK Options Clearing House Memo [pdf]

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