Hello:
Another newbie question:
You consistently inform us that the value of B.SELL falls by exactly the amount of the B.SELL dividend paid on the difficulty change date. I see that its market price fluctuates, as one would expect. But how do B.SELL holders make any profit if its value only falls and never rises? For example, if the issuing price is 0.12 and if dividends are exactly 0.02 each period, in 6 periods SELL would become worthless, and I presume its market price would then approach zero. What am I missing here? Obviously some of the NAV/unit for B.EXCH must be transferred from B.MINE shares (if B.MINE holders make a poor bet) to B.SELL shares, but how?
Many thanks!
The instant drop in price after a dividend is only temporary. The market price of B.SELL will then adjust to what people believe the future development of the difficulty will be. If people believe B.SELL is undervalued, it will slowly creep up in price between dividend-payouts. If people believe it is overpriced, it will gradually go down.
Buyers of B.SELL make a profit if they purchase B.SELL at a price that is lower than the total amount of dividends accumulated.