I disagree with the notion that dividends paid lower the share price. Is there a theoretical reason? Or is it observed in practice? I would very much like to learn more about this if you could send pointers.<p>To me this looks more like a device used by managements to justify their practice of share repurchase. The options should be repriced not when dividends are paid but rather when stock repurchase is done. Like you mention, stock repurchase never affects the strike price of options. There is a very informative comment on stock repurchases by Warren Buffet in this 2005 annual report - <a href="http://www.berkshirehathaway.com/2005arn/2005ar.pdf" rel="nofollow">http://www.berkshirehathaway.com/2005arn/2005ar.pdf</a>