Assumes working knowledge of options and a willingness to learn about new things — like volatility
If you have general questions about dividends see Top 10 questions about dividends. One strategy for capturing dividends is to buy the stock/ETF and then sell calls against that security as a hedge—a covered call. The value of the short calls moves in the opposite direction of the stock/ETF, providing a hedge. There are three major variables with this strategy: 1. How many days before …
Did covered calls on SPY, buying SPY at 119.70, selling to open April 119 Calls at 1.11. Net investment/ breakeven is 118.59. Ended up doing sequential market orders because combo order execution was not working well at Schwab. Has the feel that actual humans are involved in the process–not a good thing with a moving market.
I know that analogies usually confuse more than they help—but that’s not going to stop me from trying… Imagine that you are the season ticket holder of 4 good seats for a major league football team at the beginning of the season. A lot of people think the team is headed for the Superbowl, but you are pessimistic. You’d like to cash in on the …
Did a covered call on SPY using a combo order. Bought SPY at 119.83, sold-to-open April 120 calls at $0.70 for a net investment of 119.13.
In a recent post I gave an overview of dividend capture strategies. In some situations, an effective way to hedge risk with a dividend capture strategy is to use covered call options. If you are not familiar with options this might sound exotic, but it’s truly the training wheels of option trading. With covered calls, you can introduce yourself to the conservative, hedging possibilities of …
