However, in practice, it may not be a wise idea to sell your American call before the dividend payments and purchase back after the dividend payments. In other words, if you want to create a trading strategy to capture arbitrage profits by shorting a call immediately before the dividend payments and immediately closing out this short position by longing a call right after the dividend payments, there are some issues that may cause a failure of this strategy. Can you list those possible issues?
Get Answers For Free
Most questions answered within 1 hours.