05-09-2015, 09:37 PM
Dividends cause no permanent decrease in share price when a company earns its distrution. HCP may remain below $40 through the June expiration, but not because of any dividend payments. In fact on ex date, HCP's share price moved up much more than the dividend amount. Investor sentiment related to short term rates is the only realistic factor to determine whether these calls get exercised.
For this trade, the relevant facts to me are that before expiration/or exercise, I will have received a 56 cents dividend plus a 90 cents contract price (plus 97 cents net from previous call sell). If not exercised I'll go out another 2-3 months, giving me yet another chance to keep the stock, the dividend, and the option income. Hopefully the call sells will more than cover any price weakness. If exercised, the combination of dividends, call contracts, and sell price will provide a net of $42.43 per share.
If exercised, my HCP position will have have generated a meager 13% return over its approximate 18 month holding period. Certainly nothing to brag about. Is one reason that I'm cutting the shares loose.
For this trade, the relevant facts to me are that before expiration/or exercise, I will have received a 56 cents dividend plus a 90 cents contract price (plus 97 cents net from previous call sell). If not exercised I'll go out another 2-3 months, giving me yet another chance to keep the stock, the dividend, and the option income. Hopefully the call sells will more than cover any price weakness. If exercised, the combination of dividends, call contracts, and sell price will provide a net of $42.43 per share.
If exercised, my HCP position will have have generated a meager 13% return over its approximate 18 month holding period. Certainly nothing to brag about. Is one reason that I'm cutting the shares loose.
Alex