Reference the log/journal entries below... I'm trying to follow the accounting trail for the following scenario.
10/04/16 20:36 Sold 5 SPY 12/30/16 220 Call @2.52 $1,255.41 12/16/16 03:17 OPT ASSIGNMNT (SPY 12/0/6 220 Call) $- 12/16/16 03:17 Sold 500 SPY @ 220 $109,995.90 12/16/16 03:36 Sold 500 SPY @ 220 $(109,995.90) 12/16/16 03:36 Sold Short 500 SPY @ 220 $109,995.90 12/16/16 15:51 Bought to Cover 500 SPY @ 225.70 $(112,850.65) 12/21/16 18:36 DIVIDEND SHORT SALE (SPY) $(664.47)
The ex-div date for SPY was 12/16 (I'm sure this is part of why it was exercised/assigned on that date) and as such, because I'm short the stock on the ex-div date, I owe the dividends on those shares. This part makes perfect sense. What I'm trying to understand is where/who actually gets paid the dividend, or maybe I'm trying to figure out the exact settlement order of things. Since I bought-to-cover on the 16th also, I thought that one of the following two scenarios would be the case:
1) I was "both" short and long the stock on that date... meaning that I get paid the dividend from the shares I bought to cover (I'm long these shares) while at the same time owing the dividend to the counterparty who exercised the option (I'm short these shares).
2) because I was short but also bought to cover on the ex-div date, at close on that day I was neither short nor long the shares (i.e. a net zero position), and as such I have no participation in the dividend.