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Template:Ex amount and coronavirus: Difference between revisions
Template:Ex amount and coronavirus (view source)
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Amwelladmin (talk | contribs) (Created page with "So what happens if you have selected {{eqderivprov|Ex Amount}} as your {{eqderivprov|Dividend Amount}} payment method, and the {{eqderivprov|Issuer}} declares a {{eqderivprov|...") |
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So what happens if you have selected {{eqderivprov|Ex Amount}} as your {{eqderivprov|Dividend Amount}} payment method, and the {{eqderivprov|Issuer}} declares a {{eqderivprov|Dividend}}, the {{eqderivprov|Record Date}} passes as expected, the {{eqderivprov|Share}} starts trading [[ex-dividend]] as, by rights, it should do. ''and then something unexpected and properly epochal happens — like [[Coronavirus|the world basically ceasing to rotate on its axis for a prolonged and indeterminate time]], prompting said issuer to ''cancel'' its dividend | So what happens if you have selected {{eqderivprov|Ex Amount}} as your {{eqderivprov|Dividend Amount}} payment method, and the {{eqderivprov|Issuer}} declares a {{eqderivprov|Dividend}}, the {{eqderivprov|Record Date}} passes as expected, the {{eqderivprov|Share}} starts trading [[ex-dividend]] as, by rights, it should do. ''and then something unexpected and properly epochal happens — like [[Coronavirus|the world basically ceasing to rotate on its axis for a prolonged and indeterminate time]]'', prompting said issuer to ''cancel'' its dividend. What then? | ||
Clearly the intention of a [[derivative]] is to replicate as closely as possible the performance of the underlier. It cannot be expected that an equity derivative counterparty intends to [[guarantee]] an {{eqderivprov|Issuer}}’s obligation that the {{eqderivprov|Issuer}} itself does not ultimately perform —especially if it is not legally obliged to perform that obligation in any case (however unconventional not doing so might be) — so it would be odd to find a {{eqderivprov|Transaction}} requiring an {{eqderivprov|Equity Amount Payer}} to pay a {{eqderivprov|Dividend Amount}} notwithstanding cancellation of the actual dividend on the underlying {{eqderivprov|Issuer}}. You would expect anyone writing that kind of [[put option]] to demand quite some premium for it. | Clearly the intention of a [[derivative]] is to replicate as closely as possible the performance of the underlier. It cannot be expected that an equity derivative counterparty intends to [[guarantee]] an {{eqderivprov|Issuer}}’s obligation that the {{eqderivprov|Issuer}} itself does not ultimately perform —especially if it is not legally obliged to perform that obligation in any case (however unconventional not doing so might be) — so it would be odd to find a {{eqderivprov|Transaction}} requiring an {{eqderivprov|Equity Amount Payer}} to pay a {{eqderivprov|Dividend Amount}} notwithstanding cancellation of the actual dividend on the underlying {{eqderivprov|Issuer}}. You would expect anyone writing that kind of [[put option]] to demand quite some premium for it. | ||