7 Dividend-Capture Ideas Using an Option Hedge

If my shares are called away before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about 25 cents. The most I can make is 62 cents if I hold the covered call through option expiration day and the stock gets called away.

My last step (completed before making a trade on the same day) is to check company announcements and news sources for possible price moving events. This is especially critical during earnings season.

Digital Realty Trust(DLR)

Digital Realty provides a wide range of data center solutions and consultation, including building, buying, managing, and data center outsourcing services.

   Yield: 4.19%
   Dividend Amount: 73 cents
   Ex-Dividend Date: June 13, 2012
   Beta: 1.06

Strategy: Buy Digital Realty Trust stock and sell the June $70.00 strike or lower call for $1.46 over the intrinsic value. I will look to close out the covered option with a gain of about 65 cents, plus the quarterly dividend paid by the company.

The most I can make is $2.19 if I hold the covered call through option expiration day and the stock gets called away.

 T. Rowe Price Group(TROW)

 T. Rowe Price Group, Inc. is a publicly owned asset management holding company.

   Yield: 2.34%
   Dividend Amount: 34 cents
   Ex-Dividend Date: June 12, 2012
   Beta: 1.61

Strategy: Buy TROW stock and sell the June $50.00 strike or lower call for 56 cents 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 20 cents, plus dividend.

If my shares are called away before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about 56 cents. The most I can make is 90 cents if I hold the covered call through option expiration day and the stock gets called away.

   Eastman Chemical(EMN)

 Eastman Chemical, a chemical company, engages in the manufacture and sale of chemicals, plastics, and fibers.