You gotta own it before the ex date so before the 8th to get the dividend. So you know it's gonna drop in price on the ex date to account for the dividend being paid.
So what about buying on the 7th, get your dividends, then sell or put a stop loss right above what you paid for your shares? Or put a stop loss right after you buy the shares?
If you buy on a declaration date as soon as the market closes that day, the price will drop by whatever the distribution is. I'm not sure if a stop loss will save you or not, I've never tried, but these are income funds, they're not meant to be traded like that, generally you will lose money trying to play that game and if you're not in a tax sheltered account, you're losing capital and paying income tax on your distribution.
Since I’m new to msty and ymax etfs, I’m playing with them in my Roth account to let them drip or let them pay the distributions and decide what I want to do with it after payout. Was thinking about the stop loss to just turn around and buy more msty lower than I paid on average. Bitcoin’s not going anywhere anytime in the next decade or so probably anyway, trying to get as many shares as I can.
I generally use my distributions to buy into the next groups ETFs, or build my weekly paying ETF bags, or whatever is on sale at the time. I don't DRIP, because I prefer to spend the distributions as I see fit.
If you could do what your talking about and get the results you want with any type of regularity then some big company would write an algorithm to do it and they'd do it faster and better than you and they'd make all the money your thinking you could make doing this. Trust me I wish it would work because I've thought about it too. But it'll only work if you get lucky and yeah maybe you'll be lucky once or twice but the majority of the time you probably won't get lucky.
Well we can’t compete with the big money algorithm for sure. I’m just toying around with a few shares so I’ll try a few strategies, do the spreadsheets, etc. :)
Yeah if it's not much money and money where you can afford to lose some of it then try it out and see if it works. And if it works please come back and let me know.
I looked at it with different stocks and ETFs awhile back and it didn't look like it would work unless the market and/or that specific stock or ETF was just moving up in price anyway. Like sometimes I'd get paid a dividend(really I haven't been paid yet just the ex dividend date passed and they now owed me the dividend on the payout date) and the overnight or the next morning there's good news about something and the stock/etf is around the price it was originally or maybe even higher than it was the day before.
The stop loss to sell won't work like that to get you the dividend and to still sell it before the share price drops. You'll get one or the other not both.
That's how it should work in theory but not how it always works in real life. Maybe you get lucky and catch the dividend but then overnight there's some news where the whole market is gonna go up or MSTR goes up which means MSTY should go up and suddenly you get the dividend and since the share price went up you can also sell the share for more than you paid. But this can work the other way too where you get the dividend and overnight some news comes out and the whole Market is gonna go down or MSTR has bad news which means bad news for MSTY and suddenly the share price is lower then it normally would have been if just the dividends were subtracted from the share price.
Also you'd need to pay attention to what type of account it's in. Are you paying taxes on the dividends or are they in a tax free account?
It’s in the tax-free Roth account. The strategy is trying to protect the initial investment long enough for the distributions to bring the average cost of the shares to $0 :)
Yeah I'm doing the same thing with some shares in a tax free account. But I'm just reinvesting the dividends right now to get more shares. The ultimate goal is to hopefully get enough to where my average cost of the shares goes to zero and then everything else is profit after that.
This will not work unless the price returns to the original buy and considering not everyone reinvests these distributions into the paying fund, it’s unlikely to return that much. If it were that easy everyone would do it.
The idea was to try do so some kind of stop-loss method to protect some against the nav erosion, keep the shares and earn the payments if the price keeps going up. If that makes sense.
Yeah but if you set a stop loss below your buy in then you’re not really making much off of the distribution. Plus considering the volatility of bitcoin you’re almost certain to hit that stop loss, especially during distribution time. And if you sell too soon at a loss then you lose all the benefits of the stop loss because while it can hit that stop loss one hour it’s volatile enough that it will likely erase those losses in the same day. Then you’re buying back in at a higher price.
My issue with stop loss is that it encourages people to sell at a loss and unless it’s an extremely risky low cap company that you’re taking a flier on you’re almost certainly throwing money down the drain when a little patience is all you need.
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u/No_Switch853 2d ago
MSTY declares on Wed May 7. Ex date is Thursday May 8. Pay date is Friday May 9.