Thnx to everyone who responded. Had a really nasty trading surprise this morning and wanted everyone to be aware of it because it was a massive lost opportunity buy - here's the rundown:
1. I own stock in the shipper ZIM
2. Today it went ex-div for $2.50/sh
3. Some investors aren't aware that because it's an Israeli company Israel withholds 25% of divs as taxes - pps should have dropped $2.50*0.75 = $1.87 at the open or pre-market.
4. I had a premonition it would overshoot the should have been $1.87 correction, might even overshoot the $2.50 correction, so I entered a GTC+Ext hrs stink bid yesterday for $46 (looked like it was going to close around $48.40).
5. Get on the PC this morning and see I didn't get filled but the pps was at $45.80 - WTF? (actually went as low as $45.63)
6. Was having major computer problems (AGAIN!!), everything kept freezing up, so I couldn't get to my broker's website to quickly change my bid - took me almost 2 hrs to regain functionality, should have just frigging rebooted. When I finally got things working the stock was $47 and climbing - my standalone trading software was likely the source of most of the problems.
7. Got into my TDA account online, checked order status, and to my shock my bid had been changed to $63.50 - they adjusted my bid for the div amount - WTF?!?! Got on the horn with TDA to ask why my my stink bid was changed by their system (how can a broker unilaterally change your price?!?), and after 20 mins of back and forth with his support team it turns out they automatically change bids by the div amount (didn't take into account the 25% tax either, which you cannot recover if you're in the US), EXCEPT for one specific type of order - if you enter a plain GTC limit order with TDA you will see a "special instructions" box below, if you click on it there's an option to "DNR", for "Do not reduce" the bid by the div amount - ANY other kind of order will not give you this option.
End result was by the time all of this crap got straightened out I had to rush out of the house for a dental appt. - when I got home the pps was already above my avg. price (was trying to avg. down on ex-div date), and damned if the stock didn't close +$1.25 (+2.6%) above yesterday's close - FUCK!! I am beyond pissed about this - I could have increased my position by 1/3 while reducing my basis by almost 4%.
Summary - I had a great plan, it worked to perfection, but didn't get executed because of some stupid trading rule TDA uses that can't be avoided unless you use a trick most people have never heard of - so be aware of this with your own broker if you try to buy stock with a stink bid on the ex-div date.
The Thought Police: To censor and protect. Craig Bruce
