Smartlink network systems (NSE code: SMARTLINK) declared a special interim dividend of INR 30.00 per share. The record date for this dividend is 01-JUN-11. Ex-date is 31-MAY-11
CMP of Smartlink network systems is INR 106.00
Here is an arbitrage opportunity for those having some risk appetite.
This opportunity is based on the premise that the circuit limit for this stock is at 20%
This implies that on any particular day, the price of the stock can not fluctuate by more than 20% over the previous day's close price in either direction.
When the stock becomes ex-dividend, It is highly likely to go down by the extent of dividend declared post ex-date. Since the circuit limits for this stock is fixed at 20% it can not go down by more than 21.2 (20 % of CMP). The opportunity here is to buy the stock cum-dividend and sell it as soon as it becomes ex-dividend to make use of the circuit limit. & pocket the difference (30 - 21.2 = 8.8)
Risks involved: the stock may go into lower circuit with no buyers post the ex-date. In this case, the stock can not be sold until there are buyers for it..
CMP of Smartlink network systems is INR 106.00
Here is an arbitrage opportunity for those having some risk appetite.
This opportunity is based on the premise that the circuit limit for this stock is at 20%
This implies that on any particular day, the price of the stock can not fluctuate by more than 20% over the previous day's close price in either direction.
When the stock becomes ex-dividend, It is highly likely to go down by the extent of dividend declared post ex-date. Since the circuit limits for this stock is fixed at 20% it can not go down by more than 21.2 (20 % of CMP). The opportunity here is to buy the stock cum-dividend and sell it as soon as it becomes ex-dividend to make use of the circuit limit. & pocket the difference (30 - 21.2 = 8.8)
Risks involved: the stock may go into lower circuit with no buyers post the ex-date. In this case, the stock can not be sold until there are buyers for it..
