Option Valuation and Dividend Payments
Harris, Robert S.,...
Option Valuation and Dividend Payments
Harris, Robert S.; Conroy, Robert M.
F-1523 | Published February 5, 2007 | 11 pages Technical Note
Collection: Darden School of Business
Product Details
This note shows how dividend payments affect option values owing to the effects of dividend payments on share price and resulting investor behavior. In addition to discussing the underlying logic, the note shows how to value options for dividend-paying stocks by adapting the Black-Scholes option-pricing model. The note addresses issues of early exercise and the underlying incentives of investors who own call or put options.
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