Feedback for We have two American call options with 2 months and 5 months to expiration. Assuming a dividend is expected to be paid in 4 months, we can say that 5 months expiry call option will be worth more than 2 months expiry call option, due to higher chances of being ITM.

dividends affect American call options differently.

A dividend is expected in 4 months.

The 2-month option expires before the dividend is paid, so it is not affected by the dividend.

The 5-month option will experience a drop in stock price when the dividend is paid, which reduces its value relative to a scenario without dividends. So how is the answer “True” instead of “false”?

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