Las Vegas Sands [LVS:NYSE] is the world's largest casino company by market cap. It operates hotels worldwide, including the Venetian in Las Vegas, USA, the Marina Bay Sands in Singapore, and the Venetian Macao in Macao, China. Next week on Monday June 18, 2012, the company will go ex-dividend and pay shareholders $0.25 per share.
This dividend occurs after an options expiry and provides a unique opportunity for traders. But first, let's examine the entire situation here to get a full understanding of the scenario and settlement dates. If you understand settlement, skip down three paragraphs.
Normally, if one wished to receive the dividend, an investor must purchase the stock before the ex-dividend date. In this case, the investor must buy it on Friday June 15 at the latest to receive the dividend. He or she can sell the shares on the 18th and maintain their rights to the dividend as well. By purchasing the stock on the 15th, the shares would settle three business days after, which is Wednesday June 20.
Settlement for an option is significantly different. Regular buys and sells settle in just one day. Assignment is two business days. Example, if I purchased a call option on Monday, it would settle on Tuesday. However, if I decided to exercise the option on Wednesday, it would settle on Friday. I could also wish to exercise the option on Tuesday and have it settle on Thursday, just like if I purchased the stock on Monday instead of the option. This is very important to know because the following strategy could get very confusing.
Now, the most important date in this entire scenario is not the ex-dividend date, but the record date or date of record. Las Vegas Sands would deem the record date for its dividend Wednesday June 20. This means that the shares must be in the account and have settled on this day for an investor to receive a dividend. With all that information provided, and hopefully it makes sense, how can one attempt to receive two payments from the LVS options?
If a trader wrote a put, they would receive a premium. Now, if the stock fell below the strike price on Friday, there is a chance the buyer of the put exercises their option and sells the stock to you at the strike price. The assignment would settle on June 20, which means you would be entitled to the $0.25 dividend as well.
The stock is currently trading at $45.21 and the June puts are priced as follows:
| Strike Price | * Last Bid |
| 46.00 | $1.07 |
| 45.00 | $0.52 |
| 44.00 | $0.22 |
What you choose to write is your choice, but it is very rare for an opportunity with a silver lining like this to arise, that is, an unwanted assignment would provide income as well. Unlike most weeks, we must consider that the in-the-money put may not be assigned in the account of the writer, since the owner of the put, who may have bought it as insurance if the stock falls, may wish to receive the dividend instead. The stock has also shown good support at $45 and the stock could rally shortly after wards like it did in March after the dividend payment.
As with all trades, there is always a risk of losing your entire investment. The market is currently in a bit of turmoil and there is a chance these shares could fall well below your strike price. Take into consideration your financial strategy, needs, and tolerance.
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