I was looking into dividend capture strategies and I noticed a conversion could be set up on QQQ with long dated options for a guaranteed profit. This can be found with a few other symbols too. Is this legit, seems like this shouldn't be possible. What risks are not showing up in the risk profile?
Conversion strategy
- Thread starter bigspeculate
- Start date
Robert Morse
Sponsor
What are you be expecting to pay for the QQQ Jan 2023 295 conversion? How much in dividends are calculating you will get? What interest rate cost are you using toward your cost?
You'd have a guaranteed profit of ~$270 (trade) + $129 (div.) = $399
399/2,950 = .135 = 13.5% in ~8 months if margin req. is $2,950.
***Based upon 100 shares +1P and -1C.
***Early exercise is a risk if price increases too much but wouldn't be a factor for some time.
NUSI is down ~17% since Jan '22 even after adding in the dividend payments.
His collar would guarantee a profit.
Okay.....but what is the conversion strategy PNL from Jan 22?
the profit isn’t guaranteed. There’s an issue with your data
i dont look at these too often , but seems too good to be true
it’s the interest rate.
you will get like 1.2 in divs but will pay like 4 in interest.