So it's your opinion that every DITM Call will be exercised on all Dividend paying stocks???
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Dividend Capture using Covered Calls
- Thread starter scottiet
- Start date
So it's your opinion that every DITM Call will be exercised on all Dividend paying stocks???
Quote from luckyd1976:
So it's your opinion that every DITM Call will be exercised on all Dividend paying stocks???
Virtually all of the calls which should be exercised do get exercised. In addition if the dividend is significant, the mm's and other professionals will do dividend lottery spreads with each other to move themselves into nearly 100% of the short open interest.
I have outlined the dividend lottery spread tactic here many times.
Quote from xflat2186:
Virtually all of the calls which should be exercised do get exercised.
Calls will only be Exercised if it benefits the Market makers. But just because you do or dont get called away doesnt leave you at a loss.
GE and WMT are easy examples of this strategy. Take GE and DITM 6month out (Jun'10) reasonably priced call. You'll see your first Dividend and keep the S-side Premium. And as time winds closer to your Exp date the market makers will decide if its worth it to them for you to keep your 2nd Dividend.
Quote from xflat2186:
In addition if the dividend is significant, the mm's and other professionals will do dividend lottery spreads with each other to move themselves into nearly 100% of the short open interest.
I have outlined the dividend lottery spread tactic here many times.
Interesting stuff and in the cases of High Flyers I agree. Ill try and track down your Div Lottery tactic.
Itâs not really an opinion that the options get exercised itâs a fact of the markets efficiency. The same goes for the dividends being priced into the options. If there were additional money to be made in the dividends beyond whatâs priced into the options the whole institutional world would be doing and have been doing it until it was priced out.
Man I hear ya! I hate it too! Whenever I post something incorrect here, everyone gets all contentious on me!Quote from luckyd1976:
Just because its factored in doesnt me you cant profit from it... It goes back to your opinion, you feel that everything gets called away.This is why I hate Investing forums. Everything is a contention!
BTW, LO and GRMN go ex div day after tomorrow. LO is $1.00 and GRMN is 75 cts. Please show me how I can profit from the ex-div by Friday PM via writing covered calls.
Spin, no problem, you'll be the only one in the market tomorrow!Quote from spindr0:
Man I hear ya! I hate it too! Whenever I post something incorrect here, everyone gets all contentious on me!
BTW, LO and GRMN go ex div day after tomorrow. LO is $1.00 and GRMN is 75 cts. Please show me how I can profit from the ex-div by Friday PM via writing covered calls.
The most prevalent of stock pickers in the DITM Covered Calls w/ Dividend Stocks arena is Karim Rahemtulla, Chairman Mt Vernon Research
http://www.investmentu.com/IUEL/2005/January/deep-in-the-money-covered-calls.html
(He regularly recommends Dividend companies for his Covered Call reports from InvestmentU and Angora Inc.)
Another reference to this widely used strategy is in Seeking alpha
http://seekingalpha.com/article/118...n-writing-strategies-fishing-and-cutting-bait
âI currently use in-the-money to deep-in-the-money call-write strategies with large (mostly DJIA members) dividend-paying companiesâ
http://community.tradeking.com/members/tk-all-star/blogs/47494-deep-itm-options-as-a-dividend-play
"Bottom line: donât expect to collect four dividends from a 12-month option. But depending on the stock price relative to the strike price (that determines the option delta), your chances are good for collecting up to 3 such dividends"
http://www.investmentu.com/IUEL/2005/January/deep-in-the-money-covered-calls.html
(He regularly recommends Dividend companies for his Covered Call reports from InvestmentU and Angora Inc.)
Another reference to this widely used strategy is in Seeking alpha
http://seekingalpha.com/article/118...n-writing-strategies-fishing-and-cutting-bait
âI currently use in-the-money to deep-in-the-money call-write strategies with large (mostly DJIA members) dividend-paying companiesâ
http://community.tradeking.com/members/tk-all-star/blogs/47494-deep-itm-options-as-a-dividend-play
"Bottom line: donât expect to collect four dividends from a 12-month option. But depending on the stock price relative to the strike price (that determines the option delta), your chances are good for collecting up to 3 such dividends"
What's your point?Quote from luckyd1976:
The most prevalent of stock pickers in the DITM Covered Calls w/ Dividend Stocks arena is Karim Rahemtulla, Chairman Mt Vernon Research
http://www.investmentu.com/IUEL/2005/January/deep-in-the-money-covered-calls.html
(He regularly recommends Dividend companies for his Covered Call reports from InvestmentU and Angora Inc.)
Another reference to this widely used strategy is in Seeking alpha
http://seekingalpha.com/article/118...n-writing-strategies-fishing-and-cutting-bait
âI currently use in-the-money to deep-in-the-money call-write strategies with large (mostly DJIA members) dividend-paying companiesâ
http://community.tradeking.com/members/tk-all-star/blogs/47494-deep-itm-options-as-a-dividend-play
"Bottom line: donât expect to collect four dividends from a 12-month option. But depending on the stock price relative to the strike price (that determines the option delta), your chances are good for collecting up to 3 such dividends"
The authors of the first 2 links stated that they like ITM covered calls on dividend paying stocks and by doing that, you can achieve a 12% anuual return. The author in the 3rd link indicated the likelihood of collecting the dividends. Wlell golly gee, everyone who owns stock on the day it goes ex-dividend GETS the dividend
None of the info in your links has anything to do with the "free dividend" premise posed in the link that the OP provided.