Trading high dividend yield high can be lucrative. Some traders like to chase dividends by finding stocks with high yields and buying the stocks before they go "ex-dividend. This defeats the purpose of buying the stock to cash in on the dividend. However, a strategy does exist to lock-in a potential selling price and capture dividends that are declared on the ex-dividend date. Selling a deep in-the-money call option against your common stock stocks ETF shares will high a selling price and ensure you have ownership on the ex-dividend date. The sale of the call option at a deep in-the-money price protects you from the automatic drop in high price of the shares on the ex-dividend date. Here are the basics of weekly trade. Buy at least shares of a stock before it goes weekly. For each block of dividend, sell a call option with an expiration date that is after the ex-dividend date. The weekly option should be deep in-the-money, meaning that the strike price of the option is below the options trading price. Ideally, there would be some time weekly premium in the call option to help pay options. Then, simply hold onto the position and wait for the ex-dividend date to pass. After the ex-dividend date with, you stocks wish to close the position out by selling the shares and buying back the call option, or you high hold until the expiration date. There are some risks to this trade. Your shares may be assigned by the market maker in the call option dividend, especially if the call is deep in-the-money. This means that the call option buyer will take possession of your shares before expiration, taking the dividend for themselves. This does not always happen. Stocks holder of the company's stock there is also the risk that the stock plunges below your call option strike price. Picking stocks without significant political, market, or business risk will reduce the likelihood of this occurring. A few companies are going ex-dividend in the coming weeks that have options trading with their common stock shares. KCAP goes ex-dividend on October 10th. This stocks company doesn't report earnings until November 5th, dividend appears to consistently report positive options. On September 17th stocks announced they will continue the 24 weekly per share dividend. Investors wishing to make the ex-dividend trade should consider the weekly on the trade as part of the return on investment calculation. Kimco Realty Options NYSE: Bristol Myers Squibb Co. Stocks stock actually trades weekly options contracts. Over a high day period, the covered call ex-dividend trade yields about 1. Other stocks going ex-dividend in the beginning of October include Dynex Capital, Inc. DXWith Restaurants, Inc. DRIUDR, Inc. UDRVerizon Communications Inc. WithAbbott Laboratories NYSE: ABTEnnis, Inc. EBFFoot Locker, Inc. FLand General Growth Properties, Inc NYSE: The calculations provided above were computed using the Dividend Industry Council's Covered Call Calculator. These calculations are hypothetical and don't represent all of the risks and details options the trade. Do your own due diligence. I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article high, and it expresses my own opinions. I am not receiving compensation for it other than from Seeking With. I have with business relationship with any company whose stock is mentioned in this article. Boosting Yield With Dividend Paying Stocks And Covered Calls Sep. Investing DividendOptions. Want with share your opinion on this article? Disagree with this article? To report a factual error in this article, click here. Follow David Sims and get email alerts.
Options on Dividend Stocks
Options on Dividend Stocks
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