30 Sep

Goldman Sachs and Calimero quit quoting

In the option market, the market makers are quoting options to capture a profit from the bid-ask spread.

Apart from this, sending bids and offers to the market serves another practical goal. Euronext Liffe is charging less when you are providing liquidity to the market.

It’s not unusual for a lot of market makers to send the widest possible quotes – only quoting for the fee discount. I wondered whether all small market makers could survive in a difficult market with tight spreads and low volume. Euronext gave supplied a nice overview of the current market makers compared with one year ago (thanks).

Some new participants joined the market, and some decided to call it quits.

Exit

Never really understood why, but fact is Goldman Sachs has been registered as liquidity provider for at least a decade. Can’t imagine them interested in the small size trading in the screen. They checked out last year.

More worried about a few other firms. Calimero Trading never was in the business for world domination. Quoting in ING, RD and almost a dozen illiquid stocks (Boskalis etc). Alas, the firm with the cute name probably has shut its doors.

Another firm leaving is ABR Financial. Backed by a Russian investor, they haven’t been able to compete in the option market.

Wintrading traded all AEX options including daily’s and weekly’s. Founder Fred Winia left trading in 2002. With Rien de Vreede, Wintrading stayed a liquidity provider until this year.

Entry

Some new firms have signed for providing liquidity on Euronext Liffe.

Maven Trading is only active as liquidity provider in the AEX index options. In contrast to Wintrading, this isn’t a one man show. This British firm consists of two dozen former traders from especially Tibra, Optiver and Liquid.

Webb Traders decided to expand beyond their ETF arbitrage area to the option market. Doing ten small stocks (Vopak, Delta Lloyd etc).

Former All Options traders MMX decided to go for the Euronext options too. Over a dozen CMM licences. However, no index options.

Transfers

Comparing the list of market makers per option class can reveal strategic choices being made. Or a forced shut down of loss making units. One firm joined the action in nearly every single stock – Susquehanna (SIG).

AEX

The most popular options are the AEX index options, and the number of liquidity providers increased this year. Six new entries, of which especially Scrocca and 323 are notable. Both of them never burned their hands on index options – and quoting almost every single other stock on Euronext.

Also interesting is Timber Hill trying the weekly options while still staying away from the Daily AEX. Leopark, on the other hand, stepped out of the daily and weekly index pit.

in: EXT, The Hague Options, Maven, Susquehanna, Scrocca, 323

out: All Options, Goldman Sachs, Wintrading

ING

Checked a random largecap stock. The ING crowd welcomed EXT and MMX, while six firms threw in the towel. All Options, HOT, Hardcastle, Goldman, ABR and Calimero are gone.

All Options is leaving all the seriously traded stocks. Probably as part of a deal between Euronext and Jakobs, they remain the only liquidity provider in Mediq. Last year they have had some company from Tibra – but the Australians left Mediq. And stayed everywhere else by the way.

One stock liquidity providers

Also a major shift at Inhouse trading. In 2011 it was only providing liquidity in Fugro. This year he switched to the golden mountains of AMG. The other true specialist, Cross Options, was happy to stay only active in ING. Difficult to see the rationale of maintaining expensive fixed costs (lines, membership, software) for just one little source of revenue.

Multiple exchanges and trading venues mean more expenses. Connection lines, proximity hosting and faster software on one side, and less volume and narrow spreads on the other side. Tough times for small market makers, a serious shake out looms.

163 thoughts on “Goldman Sachs and Calimero quit quoting

  1. weren’t they primarily delta one, etf would def fall under the category, options being a new addition to the fold.

  2. Was het niet Nico Bakker van Calimero die in 2010 in een ingezonden stuk in het Financieele Dagblad erop zinspeelde dat All Options kopje onder zou gaan? Niet dat Allard geen problemen heeft, maar een klassiek gevalletje “hoogmoed komt voor de val”.

  3. I have heard they developed the new generation platform for globally integrated automated options trading

  4. what about the one where goldman sachs is buying optiver? haha, you guys and your rumors kill me!

  5. At least during the dividend season Webb does belong to the biggest traders in terms of volume on Eurex.

  6. GS buying Optiver, funny stuff. That being said, how else would a big bank get into quoting fast & right these days?? Build a platform internally?? I’d like to see that.

  7. GS does not need to quote fast. They anticipate upcoming macro data and company specific events pretty well ahead of time. They do not go for the 1 cent in quoting.

  8. who are these maven guys? are they making any money? do they trade anything else besides equity index options?

  9. ‘happy to continue to split the profit opportunities that you can’t identify’

    yes, you can say they are making millions every day, it doesn’t make it true.

  10. ‘yes, they prefer to front run their customers’ orders’

    yes, clearly legal and audit controls are that lax

  11. ‘yes, clearly legal and audit controls are that lax’

    of course they are, informal information about big orders or intentions of big orders will circulate into the bank, and that’s also completely legal. The knowledge of investor sentiment can help a lot in trading and in making the right “macro-economic” bet. Finally, in FX front running is completely legal.

  12. hey Guys!

    Did you have any issue yesterday on LiffeNL regarding AEX option class.
    Indeed, it appears that they sent multiple wrong executions!

  13. Webb Traders and Liquid….I don’t think so unless each company are taking over each others sh*t positions…

  14. @ October 1st 10.24 am:

    All is down to about 20 traders now, due to steady outflow of traders. Overhead around and about double of that. Once Jay and his team leave and join Criterion it’s game over and back to France.

  15. What’s in France? Allard´s charlet? He made far too much money with one single trade looking at his overall bad performance, lacking trading accumen and management skills over the years. But what does he care?

  16. All Options have about 2 traders and 18 graduates…..their costs (in Tbricks) will be rising and based on the historical success of Tbricks customers in Amsterdam, they will be out of business within 18 months…..as that’s how long it takes to get a simple trading strategy to work

  17. what is the problem with Tbricks? is it so difficult to work with? what about speed? anyone would like to share an experience?

  18. They have just moved into market making, meaning that there are probably a lot of problems to be sorted out.
    Allard probably thought that it was cheap…

  19. I think the point i,s it doesn’t matter if you drive a Ferrari, a kit car or a mini metro round a race track if you don’t know how to drive…..

  20. Well, AO had a massive lucky punch and then money was squandered hand over fist with their uncontrolled expansion, fancy offices and hiring frenzy. Now the bill seems to be due except for Allard himself as he is home free. Even if he continues to sink money on other losing companies there should be enough to keep his head above water for quite some time.

  21. Was not Nico Bakker Calimero in 2010 in a letter to the editor in the newspaper hinted that Financieele All Options submerged going? Not that Allard has no problems, but a classic case of “pride comes before a fall

  22. ‘are suggesting trading is a zero sum game’

    a better question is if derivatives are zero sum game.

  23. are you sure? what’s about the time horizon? Both the buyer and seller could in principle make money, but at different time horizons

  24. Take a very simple model with only 2 participants. One person’s profit is the other’s loss. Expand to three, four and higher, it’s no different. Biggest Ponzi scheme on earth. The winners are those who float their crap (eg Facebook). And the HFT firms who suck out all the intermediate price gains.

  25. Criterion is headed by two former AO directors, Ebbo de Vries and Gert de Rover, and the former Head of Trading, Frank Hijmans. They were well -respected at AO, especially Ebbo.

    The traders are a bunch of former AO traders. Some real good ones.

  26. Jay is Erik van Maanen, originally from Saen Options, and streets ahead compared to the other traders. God knows why he hasn’t joined another firm yet.

  27. ‘it is a zero sum game, but only overall, including all participants’

    so what happens when the central bank starts printing money and companies start paying off dividends?

  28. ‘Both the buyer and seller could in principle make money, but at different time horizons’

    Even after adjusting for inflation ?

  29. ‘http://online.wsj.com/article/SB10000872396390443982904578046532220799200.html?mod=WSJUK_hpp_LEFTTopWhatNews#articleTabs%3Darticle’

    Any one got the whole article, pls post here.

  30. ‘One person’s profit is the other’s loss’

    what about money printing and credit & monetary expansion, its money being created out thin air, surely with better economy and trades, everyone prospers?

  31. ‘The traders are a bunch of former AO traders. Some real good ones’

    Are they using Orc, Tbricks or Actant?

  32. ‘streets ahead compared to the other traders. God knows why he hasn’t joined another firm yet’

    because he ain’t?

  33. ‘The traders are a bunch of former AO traders. Some real good ones’
    Are they using Orc, Tbricks or Actant?

    I think Sol 3

  34. Searching for a good reliable trading arcade to trade on a remote trading set up, please help me out?

  35. better options, market wizards, xconnect or kyte, although Kyte’s terms can be onerous or so i’ve heard.

  36. ‘tibra sucks, no bonuses…’

    how is that, inept traders not making money or too much costs or difficult trading conditions or uncompetitive IT systems?

  37. yes, all of this, except the last point: their IT systems are very competitive. But good IT is not enough in our days

  38. That’s why the Virtu / Nyenburg combination is so successful. They have Virtu’s superior IT and Nyenburg’s top traders. Win/win.

  39. no, management in trading is like aristocracy 100 years ago, they are just there to get payed by the traders, their value is 0. You can not blame management if trading does not make money, at the same time you cannot prize management if things go well, P&L can be associated quite objectively to traders.

  40. this is an extreme view, what’s about hiring? Making IT budget/project decisions, making sure there is the right level of teamwork?

  41. Ha! You sound like a manager who’s desperate to justify his position, Or maybe I’m just jaded because of the utterly incompetent managers I’ve had to deal with.

  42. not all managers are equal, the same as not all traders are equal. If your company’s managers are incompetent it does not imply all other managers are incompetent. Which company are you working for?

  43. ‘yes, management is ok, the problem is the traders not making money for the management’

    in case unnoticed, pls notice the sarcasm in the tone.

  44. ‘P&L can be associated quite objectively to traders’

    what about Strategic and IT investment and most importantly capital allocation to traders, do traders do that too?

  45. Haha. The amount of trading capital available to traders usually isn’t much of a restriction at mm firms (unless you want them to max out the credit line with some additional outright plays). Even less so if youre a pure HFT firm that is flat at the end of the day. It stands to reason that capital continues to be allocated to those who are making money, whereas those who cannot make money with an adequate amount of capital will not become big swinging dicks with some more capital (they will only gamble more). It’s not rocket science you know. Typically traders will identify a temporary need for additional capital far quicker than management.

    Then there are the managers who have no experience trading themselves. They are the worst. Often they simply don’t understand the simplest things about why a trading strategy works (or not) or what is needed to make it work. Their only “redeeming” qualities are kissing the asses of those above them, taking credit for other people’s P&L and hobnobbing at social events because they spend so much time away from their desks. I’m sure everyone around here came across such a manager at one point in their careers (unless they’ve been self-employed all along). They are the ones who do their thing for a couple of years until finally they are are recognized as incompetent, kicked out and ultimately fade into oblivion. Read some older posts on this blog and you will see the names of many such characters.

  46. ‘Which company are you working for?’

    IMC, where managers fit the description above, the main problem is they have no clue of why a strategy works or doesn’t. But they are smart enough to blame/fire traders if money is lost and get big rewards for themselves if money is made (together with a relatively small bonus to the good traders).

  47. did you ever think that perhaps managers know much more about trading than what you think? Many of them were former traders and do not expect management to make miracles by transforming every strategy into a cash cow

  48. “did you ever think that perhaps managers know much more about trading than what you think?”

    I thought about this long and hard. And then some more. The answer was still “no.” Sorry buddy.

  49. ‘The amount of trading capital available to traders usually isn’t much of a restriction at mm firms’

    you are confusing capital with size of book, good traders are moved to bigger markets like Stoxx or S&P, while the poor traders are gotten rid of.

    ‘Even less so if youre a pure HFT firm that is flat at the end of the day’

    HFT is a different game where Tech/Trading/Strategy is all combined into the management itself.

    ‘It’s not rocket science you know’

    Hacking losses and letting your profits run is not rocket science either, in fact its trading 101, how many times do you see that happening.

    ‘Typically traders will identify a temporary need for additional capital far quicker than management’

    Management/Finance/Risk would act as company balance sheet’s guardian and deploy it out to Trader’s Idea.

    ‘Then there are the managers who have no experience trading themselves’

    There are ex-traders who became management after successful trading run, purely out of luck, rather than real trading abilities, you can expect how they manage their trading teams.

  50. ‘IMC, where managers fit the description above, the main problem is they have no clue of why a strategy works or doesn’t.’

    If it’s that bad, why don’t you quit and start your own IMC or join another firm. Either stop complaining or quit, nobody likes crying baby.

  51. ‘did you ever think that perhaps managers know much more about trading than what you think?’

    Haha, just because you were profitable for few years doesn’t mean you figured out trading, there was good run, could be purely of luck, also you can always fall into classic trading traps few years into your trading career, losses usually come after you have ‘figured’ out the market, lol.

    ‘do not expect management to make miracles by transforming every strategy into a cash cow’

    haha, you think management creates miracles by taking trader’s strategy and making into cash cow, ya you fit in well with trading manager definition.

  52. ‘sometimes you just have to say fuck you’

    what else are you going to do, keep sucking management’s arse or keep complaining, haha.

  53. ‘did you ever think that perhaps managers know much more about trading than what you think?’

    If that was the case, they could either trade themselves or have profitable trading teams, complete ownership of results, they can’t put the blame of losses on the team itself.

  54. running a trading company and making it successful is not just about sending buy and sell orders to the markets. That’s what many traders do not understand. Traders get lots of stuff to be successful: know-how, capital, IT infrastructure, exchange connectivity, good fees, all sort of operational support. Did you ever ask who makes all this possible?

  55. “Traders get lots of stuff to be successful: know-how, capital, IT infrastructure, exchange connectivity, good fees, all sort of operational support. Did you ever ask who makes all this possible?”

    Yeah, the traders make this possible with their P&L that’s who!
    Management know-how: zero.
    IT infrastructure: management is clueless. Moreover, they don’t build the infrastructure. For that you have good ITs.
    Exchange connectivity: as if management is programming the exchange interfaces. You pick your markets and with that the connectivity requirements.
    Good fees: our management is only out drinking with the clearer. Fees have not come down in three years, some have even gone up.
    All sorts of operational support: our manager couldn’t even work the coffee machine.

    Explain to me again how management is essential to my performance as a trader?

  56. “Management/Finance/Risk would act as company balance sheet’s guardian and deploy it out to Trader’s Idea.”

    Don’t even get me started on Finance and Risk. Useless bean counters and idiots. Every time you read about traders hiding big losses (eg UBS), it’s because they figured out where management and risk weren’t looking. And by the time the loophole is discovered, it’s usually already too late.

  57. “just because you were profitable for few years doesn’t mean you figured out trading”

    my “few years” of profitability is still “few years” more than the time that management traded profitably for themselves :-)

  58. ‘Did you ever ask who makes all this possible?’

    The guy in IT, admin, HR, infra, operations etc.

  59. ‘Capital: not the manager’s capital’

    Its the owner’s capital, owner picks up management as fidicuiary of the capital.

  60. ‘Don’t even get me started on Finance and Risk.’

    No pls do Mr Big Swinging Dick Trader. Rest of the world is of course clueless about your positions, bid and offers because its such a Rocket Science.

    ‘Every time you read about traders hiding big losses’

    You mean to say there would not be a fuck ups once in a while in every department, what about the countless times where the trader was found out in time, fired and you didn’t hear about it?

    ‘eg UBS’

    read this – http://uk.reuters.com/article/2012/10/08/uk-ubs-trial-idUKBRE8970L320121008

    yes, Henry Chu knew about Adoboli’s fictitious trades and was colluding with him to get the Front Office Job all the way over there in London.

    ‘it’s because they figured out where management and risk weren’t looking’

    so of course it’s not Trader’s responsibility to act responsibly but the control functions who should control all everything while being paid peanuts in comparison.

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  62. You cannot compare humans and monkeys, that’s plain absurd. Unless you believe these fairytales called the theory of “evolution.”

  63. ‘You cannot compare humans and monkeys, that’s plain absurd’

    lol, you have been drinking your own cool-aid too long, haha.

    Food, Sex, Sleep, yes we are very different from Monkeys.

  64. in all fairness, somebody is taking a pot shot at Chris for being Christian and believing God creating man rather than evolution theory.

  65. Allard should just stop trading and enjoy his wealth, at least his track record speaks against making money in trading, outliers do not repeat so frequently!

  66. Of course not. Allard only wants people who agree with him. He can not stand people who have different views. Over the last couple almost every senior trader has left because Allard wanted things only done his way. Look where he has ened up: the firm has basically been loss-making for the last four years now.

  67. Doesn’t really matter who stays, does it? I mean, All Options really only ever made money with short sales in German shares over div date. Even the fabled Altana trade was essentially that (admittedly they did their homework with regard to the r-factor). So I actually never understood why some are always saying that Allard is such a brilliant trader, everybody can make money that way (well not anymore of course).
    Everyone always talks about the Altana-trade re Allard/AO but apart from that, what else did he do? That’s the real difference with Optiver and IMC (and Flow) they always make money with trading, don’t they?

    So who cares who and how many stay behind with him?

  68. @9.04am

    This is about the loophole where Eurex Clearing credits the short seller over ex-date with the dividend tax that in reality was never withheld from the seller as he never owned the shares. So it’s basically a gift.
    Technically it prolly wouldn’t qualify as dividend-stripping (I am no expert on this) as it has to do with Eurex clearing not bothering to check whether the seller of the shares indeed had div tax witheld before crediting the
    account (he had not as ot was a short sale).

    Because of the implementation of new procedures as of this year is no longer possible. This probobaly hasn’t helped Allard’s results this year as he has no longer the benefit of around 5 million trading revenue a year (just guessing here really). So it’s now up to market making to deliver as I understand that’s all they do these days. And they never really have.
    It’s a shame, as I always liked him although I haven’t seen him in years.

  69. interesting, so Allard was basically doing regulatory arbitrage. Was this also his most profitable trade?

  70. Wouldn’t call this regulatory arbitrage, closer to dividend -stripping.
    I have no to what happens within All Options, but from having talked to All Options former traders, I understand was a big chunck of the profit, certainly the last 5 years or so.

    Also, having read previous posts, it seams to put the Altana trade in perspective. Apparently it was a huge short sale over ex-date and also being on the right side of the short sqeeze. Don’t know how they did it, but I guess they were just hedged while others certainly weren’t?

  71. Altana closed extremely low in the close on the cum-date which meant that there was a big jump on the next day. AO happened to have lots of premium. Why? They knew there would be a big move, since they were the ones who had to sell shitloads of shares in the close on the cum-date. They bought lots of ITM calls so they could short shares for their dividend stripping. Delta 100 before the event, delta of almost 400 after. So for every share they needed to sell another 3 in the close on the cum-date. Add to that the stupidity of some counterparties who forgot about the delta changing in the event and there is suddenly a very big seller, but no offsetting buyers (that part is not due to Allard being brilliant, but others being extremely stupid. Darwinism at work, and Allard got lucky). The next day these people suddenly found out that they had to buy lots of deltas (and Allard could sell because of his massive gamma), but instead of selling Allard squeezed them a bit more and started buying as well. Some call that smart trading, some say it’s getting close to market manipulation. Anyway, it all worked out well for Allard. My guess is that 60% of their profit was from the dividend stripping, and the remainder from gamma.

  72. Dividend stripping as in buying lot of itm calls and selling shares? isn’t it buying itm puts and buying shares thus taking ownership of shares away from the original tax-liable owner?

  73. Also, Peterffy in his letter alleges prearranged sale of 31m shares bringing much low strike price and exaggerated multiplier for the holders of hedged short call options. Doesn’t sound AO got lucky, sounds well planned from their side.

  74. @12.59: yes, they also had lots of puts. But in Germany you can’t exercise calls on the day before ex, so they also bought that day lots of calls, paying well over intrinsic.

    There was nothing prearranged about the sale in the closing auction. They just put in big sell orders to hedge their position (after the delta change due to the multiplier change). If all counterparties had properly hedged their position as well (you need to hedge at the closing price in such cases) there should have been an equivalent number of buy orders. That didn’t happen, and that’s lucky for Allard. It’s impossible to be hedged without trading in the close.
    Timberhill lost a lot because they don’t have traders that think, but a system that sells and retreats. In the weeks before this event AO bought lots of premium (sending vols from 30 to 90 or so) and Timberhill was the only one selling. That’s just the risk you run when you try to do everything automated. He was just a bad loser.

    I’m not denying AO planned it well, they did. But if everyone would have hedged their position like they should have, AO would have made a lot less. And if they hadn’t been dividend stripping, they wouldn’t have made much at all.

  75. @12.59 Correction: you think of conventional dividend stripping. What they did in Germany was about being short a stock that goes down with 100% on the dividend on the ex-date, but only having to pay 79% of that dividend on the shares you are short, like 5.27 pm already explained.

  76. @1.54 am: this is essentially correct.
    And every share sold in the auction meant another 21% of from the top of my head 30-odd euro. And ironically the r factor meant they had to sell a lot of shares to just stay hedged, to offset their long-premium positions. In this case the hedge meant no slippage at all, just more money because of the 21%.

    I would argue that if they weren’t dividend stripping they wouldn’t have made ANY money. So essentially the German tax-payer funded All Options. But the transaction (apart from the short squeeze whch was just dum luck) was wel tought out and executed. And I guess doing it from from Curacao didn’t hurt either.

  77. thanks for explaining, but I am not sure if I got it 100%, could someone please come up with a numerical example illustrating how AO made money with this trade?

  78. I don’t work there, but I can explain the dividend stripping part for German shares:

    share price: Eur 10
    gross div: Eur 1
    Div tax: 21%

    sell 100 shares @10 on 1 or 2 days before ex-date
    buy back 100 shares @ 9 on ex -date (theoretical price of share on ex-date)

    Profit: Eur 100

    Eurex debits Eur 79 from seller (and credits buyer) for dividend
    Eurex should have debited EUR 100 from the seller as it is not dividend, but in reality a compensation payment over which you can not claim withheld tax

    Overall result for seller:

    Eur 100 – Eur 79 = Eur 21

    Thank you very much Eurex.

    Now in case of a superdiv like with Altana this really adds up:
    21% of 33(?) + almost Eur 7 per sold share

    It’s a money machine. Of course you have to deliver the shares, so you will have borrowing costs, but still..

    The second part I don’t know but the this would make sense:
    The r-facor determines how many shares one has to buy/sell to stay hedged.
    So if the r factor is 3 you have to buy/sell 200 extra shares to remain hedged.

    Guessing here, but I think they had a corresponding option position (l think long calls) and to stay delta neutral they then had to sell extra shares to stay delta neutral (@Eur 7 per share) in the closing auction.

    Apparently they also made a lot of money from the resulting short squeeze. Clearly not all the parties (such as Timber Hill) with an opposite position did buy the required extra shares in the closing auction , hence the drop in the share price which then led to the short squeeze.

    Haven’t got a clue how much was made from the short sale and how much from the short squeeze, but it very well could be 60-40.

    Unfortunately they have now closed that loophole.

  79. Still hard to find a reason why So haschosen Tbrick
    Horizon was a disaster choice for them (and others)

    but Tbricks in NL doesn’t have a name yet at least not good yet,
    (At 3 other firms Tbricks got kicked )

  80. @2.14 pm

    Not so sure about this, if he bought so much premiums (i.e. long calls) he could have been legitimately selling shares during the auction to stay delta neutral.

    If everyone has hedged their position during the closing auction, then I could indeed only explain the lower price by heavy selling (either by AO or by some other party). However, if not everybody hedged their position during the closing auction (which seems to have been the case, then there were just way more sellers than buyers) which would inevitably would lead to price drop and in which case Allard was just lucky and profited from it (because of gamma).

  81. ‘But in Germany you can’t exercise calls on the day before ex, so they also bought that day lots of calls, paying well over intrinsic’

    why did they do that, to squeeze TH the next day?

    ‘And if they hadn’t been dividend stripping, they wouldn’t have made much at all.’

    how did they do that while being short stock?

  82. ‘What they did in Germany was about being short a stock that goes down with 100% on the dividend on the ex-date, but only having to pay 79% of that dividend on the shares you are short,’

    why would stock go down 100% dividend when investors are liable for dividend tax, shouldn’t it go down by after tax dividend payout?

  83. ‘sell 100 shares @10 on 1 or 2 days before ex-date
    buy back 100 shares @ 9 on ex -date (theoretical price of share on ex-date)’

    knowing the dividend tax is certainty for pretty much all holders, shouldn’t the stock trade at 9.79 cum dividend and 9 ex-div>? 0.79 is shareholder’s payoff and 0.21 tax pay-off?

  84. @7.24 there are enough people who don’t have to pay the tax/can offset it against other taxes they have to pay. This is in general the case for domestic institutions and sometimes foreign pension funds, plus a whole heap of other exceptions, which can differ per country. As long as there are enough exempt investors the stock will go down with the full pre-tax dividend on the ex date.

  85. “why would stock go down 100% dividend when investors are liable for dividend tax, shouldn’t it go down by after tax dividend payout?”

    Money is out of the company anyways right, whether it’s flowing to investor or tax authorities, what if tax is 100%

  86. The main problem was more that Eurex’s adjustment procedure basically means that one needs to reinvest the special dividend into the actual stock.
    The problem of this approach in the Altana case was that the special dividend was a lot higher than the remaining value of the share and there are large shareholders, so that the free float was basically way too small for the needed shares for hedging the options.
    This is similar to the VOW squeeze where the open interest in the derivatives market was higher than the actual tradeable shares.

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