Love those Dividends

The dividend for my NAT position Was credited to the account today. $132. That plus the $90 received as the sold call option gives a 6.0% return net of commissions on the initial investment 2 months ago.  The value of NAT is down a little, so we will see where the return sits when the option expires on 12/15.

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2 Responses to “Love those Dividends”

  1. Houyhnhnm Says:

    If you are holding a stock for just 2-3 months, I don’t see what good a dividend is. The stock price is marked down the day it goes ex-div, and you don’t get a tax break on dividends unless you hold the stock 6 months. Can you clarify?
    Thanks

  2. Tim Says:

    The strategy would be to collect both the option premium and dividend before the stock is called away. If you sell in the money calls, you only expect to get the strike price anyway.

    I have found this strategy to be hard to actually execute. The stock usually gets called as it goes ex if in the money and a big dividend. I am now trading more volatile stocks than the high dividend payers to collect more option premium.

    I still keep an eye on some of the shipping stocks. Good dividends and volatility. Just stay away from the possibility of getting called early.


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