One of the catches (and there are always at least one), is that the investor gives up some upside.
2023 Ex-Dividend and Pay Date information from SPDR referenced in this post. 2023 Ex-Dividend Dates 1-Feb 1-Mar 3-Apr 1-May 1-Jun 3-Jul 1-Aug 1-Sep 2-Oct 1-Nov 1-Dec 18-Dec 28-Dec (Potential Excise Distribution) Pay / Distribution Dates 7-Feb 7-Mar 7-Apr 5-May 7-Jun 7-Jul 7-Aug 8-Sep 6-Oct 7-Nov 7-Dec 22-Dec 4-Jan-2024 (Potential Excise Distribution) BABS SPDR Nuveen Barclays Build America Bond ETF (BABS) BIL SPDR Barclays 1-3 Month …
Bond or stock dividends are interesting because they are market discontinuities. Unlike surprising earnings reports, revised analyst ratings, or lawsuits dividends are usually predictable in both amount and timing. You can capture a dividend by just buying and holding onto a investment that offers them, but then you are exposed to the price movements of that instrument.
Big moves usually don’t happen in a day, be patient Don’t fight the market Consider not jumping in or out all at once—no matter which way the market goes there will be something good to be said about it (e.g., at least I got half out…) Regardless of the market trend the chances of an up day tomorrow are always fifty-fifty (post) Don’t buy at …
The word “rules” is a bit harsh, but “guidelines” is too soft. Maximum premium is around ATM Buy-writes held to expiration have delta of 0 above the strike, -1 below the strike Don’t mess around too much with bid/ask spreads Don’t use credit / debit orders for covered call transactions unless it is a very slow moving market or if the spreads are unreasonable. Otherwise …
