Expire Dividend Right

An expire dividend right refers to the forfeiture of the right to receive a dividend payment if the holder does not meet specific conditions, such as exercising an option before the ex-dividend date. In options trading, holders of call options must exercise their rights before the ex-dividend date to receive the dividend from the underlying stock. Failure to do so means the holder will not receive the dividend, as the stock’s price is typically adjusted downwards on the ex-dividend date. Understanding expire dividend rights is crucial for investors in options and other derivatives, as it impacts the total return on investment.

Example

If an investor holds a call option on a dividend-paying stock but does not exercise it before the ex-dividend date, they lose the right to the upcoming dividend.