There are many dividend capturing strategies, and I have used more than one.The criteria that I use is that I must be able to sell a call option in either the front, or first back month that is in the money, and with enough premium that I will not mind getting exercised early (which happens often and can be a good thing if the trades are executed correctly). This is one of my favorite and easy to understand methods of making gains through options and dividends. Although much of the gains will come from dividends, it should be noted in my experience, the option decay can provide a return. This is especially true in lower yielding stocks.
Omnicom Group Inc. (OMC) Yield: 2.58%
Dividend Amount: $0.25
Ex-Dividend Date: September 21, 2011
Beta: 1.17
Strategy:
In combination with my buying the stock and after checking company updates, offer to sell the October $35.00 strike call for $0.90 over the intrinsic value. The option may get exercised early for a gain. If not, after qualifying for the dividend, I will attempt to close out the trade with a gain of near $0.25.
In the last month, the stock has decreased in price -8.66 %, with a one year change of 7.41%.
Comparing to the S&P 500 price changes, the price performances are -6.68% vs. the S&P 500 from a month ago, and year to date difference is -9.44% vs. the S&P 500 price change.
