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Template:Dividends on index transactions: Difference between revisions
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, 17 May 2022→{{eqderivprov|Dividend}}s on {{eqderivprov|Index}} {{eqderivprov|Transaction}}s? No, sir. But yes, sir.
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==={{eqderivprov|Dividend}}s on {{eqderivprov|Index}} {{eqderivprov|Transaction}}s? ''No'', sir.=== | ==={{eqderivprov|Dividend}}s on {{eqderivprov|Index}} {{eqderivprov|Transaction}}s? ''No'', sir. But ''yes'', sir.=== | ||
We shouldn’t really ''need'' to say it, but we will: You don’t — well ~ cough ~ ''shouldn’t'' — get [[dividend]] payments on an {{eqderivprov|Index Transaction}}. The {{eqderivprov|Index}} calculation methodology will either replicate the effect of dividend reinvestment on {{eqderivprov|Index}} constituents, by proportionately re-weighting constituents when they pay dividends — in which case you will get the effect of those dividends just through “price return” of the {{eqderivprov|Index}} level — or it ''won’t'', in which case you ''won’t'' get the effect of those dividends, BECAUSE YOU BOUGHT A DERIVATIVE OF AN INDEX THAT | We shouldn’t really ''need'' to say it, but we will: You don’t — well ~ cough ~ ''shouldn’t'' — get [[dividend]] payments on an {{eqderivprov|Index Transaction}}. The {{eqderivprov|Index}} calculation methodology will either replicate the effect of dividend reinvestment on {{eqderivprov|Index}} constituents, by proportionately re-weighting constituents when they pay dividends — in which case you will get the effect of those dividends just through “price return” of the {{eqderivprov|Index}} level — or it ''won’t'', in which case you ''won’t'' get the effect of those dividends, BECAUSE YOU BOUGHT A DERIVATIVE OF AN INDEX THAT DOESN’T REPLICATE THE EFFECT OF ANY DIVIDENDS.<ref>The S&P 500 index, for example, does not factor in any [[dividend]] payments. Apparently.</ref> | ||
Either way, the dividend provisions of the {{eqdefs}} aren’t — well ~ cough ~ ''shouldn’t be'' — relevant to {{eqderivprov|Index}} and {{eqderivprov|Index Basket Swap Transaction}}s. So they don’t really countenance the idea of an {{eqderivprov|Index}} paying through dividends. While, in the Russian-doll [[definitions|defined terms]] schema confected by {{icds}} an {{eqderivprov|Index Swap Transaction}} is a kind of {{eqderivprov|Equity Swap Transaction}}, and therefore can have a {{eqderivprov|Type of Return}} applied to it, when you dive down the rabbit hole, through the {{eqderivprov|Total Return}} star-gate, along the {{eqderivprov|Re-investment of Dividends}} axis and into the {{eqderivprov|Dividend Amount}} portal, you hit the hard black nothingness of dark energy: A {{eqderivprov|Dividend Amount}} is defined, of course, by reference to a {{eqderivprov|Share}}’s {{eqderivprov|Record Amount}}, {{eqderivprov|Ex Amount}} or {{eqderivprov|Paid Amount}}, and not that of an {{eqderivprov|Index}}, for the compellingly straightforward reason that [[Index - Equity Derivatives Provision|Indices]] are abstract numbers. They don’t ''pay'' dividends. | Either way, the dividend provisions of the {{eqdefs}} aren’t — well ~ cough ~ ''shouldn’t be'' — relevant to {{eqderivprov|Index}} and {{eqderivprov|Index Basket Swap Transaction}}s. So they don’t really countenance the idea of an {{eqderivprov|Index}} paying through dividends. While, in the Russian-doll [[definitions|defined terms]] schema confected by {{icds}} an {{eqderivprov|Index Swap Transaction}} is a kind of {{eqderivprov|Equity Swap Transaction}}, and therefore can have a {{eqderivprov|Type of Return}} applied to it, when you dive down the rabbit hole, through the {{eqderivprov|Total Return}} star-gate, along the {{eqderivprov|Re-investment of Dividends}} axis and into the {{eqderivprov|Dividend Amount}} portal, you hit the hard black nothingness of dark energy: A {{eqderivprov|Dividend Amount}} is defined, of course, by reference to a {{eqderivprov|Share}}’s {{eqderivprov|Record Amount}}, {{eqderivprov|Ex Amount}} or {{eqderivprov|Paid Amount}}, and not that of an {{eqderivprov|Index}}, for the compellingly straightforward reason that [[Index - Equity Derivatives Provision|Indices]] are abstract numbers. They don’t ''pay'' dividends. | ||