This is our weekly segment highlighting our dividend capture strategy. Part of my portfolio is built around trading stocks that distribute dividend shortly after I enter the position. Usually I earn both the premium and the dividend, but often I get exercised and I deliver the stocks I own (usually I’m in a covered call position). You can follow us on Twitter, where we often publish more trade ideas like these.
To those who are new: We create a watchlist for stocks that distribute dividends before expiration (usually 5-30 days) and we are looking to enter those trades during the week. We hope to capture the dividend and lessen the risk with selling calls. This will usually allow us to profit from both the dividend and the call options. If the stock goes lower we will be able to continue and selling calls and lower the cost basis.
We are usually looking for are good stocks, meaningful dividends and relative short holding period:
The dividend capture watch-list:
* BHP is a new candidate in the watchlist and I like the high dividend. This increases the chance of being called and getting the premium this week.
Try OptionSamurai for free:
- Analyse those stocks in OptionSamurai
- We have a dividend capture scanner that you can use to find trades or customize to fit your needs (you can try in the free demo):