I am new to the market and I have see the share price fall whenever company announce the dividend. Can I make a strategy around short sale the stock before dividend announcement and buy back the stock after price fall? Is someone doing this strategy?
@Madhur it sounds good but unfortunately it wont work. Currently we follow T+1 settlement which means that stock bought/sold on the “T” day actually is delivered on the next day i.e. T+1 day. So if you sell the stock, you need to have the stock in your demat or else it would result into auction (In auction you end up paying heavy penalties)
How about shorting stock future or buying puts or selling call?
@amit again not possible. As soon as the dividend is announced, the price gets adjusted. In most of the cases the prices get adjusted on the expected value as well.