IOC option premium drop

F&O
1

Hi,

Looking at option premiums of IOC, I noticed premiums of PE are not increasing despite drop in price. I understand that there was dividend adjustment in IOC shares on 23rd March 2021. At the same time, there was no change in the option strikes as a result of dividend. So why are the option prices not reflecting the almost 3% drop in underlying?

Thanks,

AB

2

prices of futures and options would have already factored in dividend as holders of f&o don’t receive it… as this was normal dividend… less than 5 percentage… there was no adjustments…

3

Hi,

Thanks for quick reply.

What surprised me was that, this insensitiveness towards underlying drop wasn’t after dividend announcement but after ex-dividend date. So if the FnO sellers has already priced this, why wasn’t this reflected in premiums immediately after dividend announcement rather than post Ex-dividend.

Also, If dividend was already factored then shouldn’t the premiums rise after dividend announcement rather than premium dropping now?