Glossary · Selection & Timing · E
Ex-dividend date in plain English.
The first trading day on which a stock trades without its next dividend. To receive the dividend you must buy the shares before the ex-dividend date; with US T+1 settlement, the ex-date and the record date are the same day.
Track
Selection & Timing
10 terms in this track
Taught in
Earnings, dividends and binary events
In the index
42 of 129
Filed under E
Connections
8
Related terms mapped below
01
The idea, in context
How to read the picture above and where the Academy teaches it.
Reading the illustration
Dates matter: an event inside your expiry window changes the trade’s risk.
In French: Date ex-dividende
Where it’s taught
Selection & Timing
Earnings, dividends and binary events
“Earnings, dividends and binary events” introduces this term with worked examples, a quiz and the trades around it. The Academy is part of the YieldCove membership.
02
How it works in the wheel
Where this idea fits in the cash-secured put → covered call cycle.
Quick answer: buy by the close of the trading day before the ex-date and the dividend is yours; buy on the ex-date or later and the seller keeps it. Since US stocks moved to one-day (T+1) settlement in May 2024, a purchase settles the next business day, which is why the ex-date now falls on the record date.
On the ex-date the stock usually opens lower by roughly the dividend amount, because new buyers no longer receive it. For a put seller that small drop slightly raises the odds of assignment; for a share owner it is not a loss, since the dividend is paid to you.
For covered calls, the ex-date is the day early assignment becomes a real risk. The call holder can exercise the day before to own the shares on the ex-date and collect the dividend. Check one number: if the call's time value (its price minus its in-the-money amount) is smaller than the dividend, exercising pays the holder more than holding the call — expect to be assigned and lose the dividend.
Track ex-dates next to your expirations: the covered call calculator shows what a call earns if it expires or the shares are called away, and the free wheel spreadsheet keeps every call and dividend in one log.
Run your own numbers
Try your own stock, strike and premium in the free covered call calculator — no account needed.
Try it in the covered call calculatorRelated terms
03
Worked example
Illustrative numbers, before commissions and taxes. Not a recommendation.
Microsoft's November 2026 dividend and a covered call
- Microsoft declared a $0.98 quarterly dividend with a record date of November 19, 2026, payable December 10 (company release, September 15, 2026). With T+1, the ex-dividend date is also November 19: you must own the shares at the close on November 18.
- Say you own 100 MSFT shares and sold a $480 call expiring November 20. On November 18 the stock trades at $500 and the call is worth $21.50: $20 of intrinsic value and $1.50 of time value.
- Time value ($1.50) is larger than the dividend ($0.98): exercising early would throw away more than the holder gains, so early assignment is unlikely.
- If the call were worth $20.60 instead, its time value would be $0.60, less than the $0.98 dividend. Expect assignment on the evening of November 18: your shares are sold at $480 and you do not receive the $98 dividend.
The takeaway
Before every ex-date, compare each in-the-money call's time value with the dividend. If the time value is smaller, roll or close the call, or accept that the shares — and the dividend — may be gone the next morning.
04
Risks and FAQ
What can go wrong, and the questions traders ask most.
Risks to respect
- Early assignment on covered calls. In-the-money calls with little time value are often exercised the day before the ex-date; you keep the call premium but lose the dividend and the shares.
- The price drop is real. The stock typically opens lower by about the dividend, so buying just before the ex-date to "capture" a dividend is not free money — and the dividend may be taxable.
- Dates move. Ex-dates are set by the company's record date and exchange rules; confirm them in the company's own announcement before you trade around one.
Frequently asked questions
Do I get the dividend if I buy on the ex-dividend date?
No. Shares bought on the ex-dividend date or later trade without the dividend; the seller receives it. You need to buy by the close of the previous trading day.
Is the ex-dividend date the same as the record date?
In the US, usually yes since May 28, 2024: with T+1 settlement, a purchase made the day before the ex-date settles on the record date, so both fall on the same day. Under the old T+2 rule the ex-date came one business day before the record date.
Can my covered call be assigned early because of a dividend?
Yes. When an in-the-money call's remaining time value is smaller than the upcoming dividend, the holder often exercises the day before the ex-date to collect the dividend. Rolling or closing the call before then avoids losing the shares and the dividend.
05
Connected terms
8 terms around this one — the words its definition uses, its lesson siblings and the terms that build on it.
- Used in this definition
- Same lesson
- Builds on this term
- Same track
06
Where to go next
Understand it, try it with real numbers, then track it for free.
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