Big Dividend Captures With Microsoft, Walgreens, Lilly, Target and Duke
Eli Lilly & Co. (LLY)
Drugmaker Eli Lilly directs its research efforts primarily toward the search for products to diagnose, prevent and treat human diseases. The company also conducts research to find products to treat diseases in animals and to increase the efficiency of animal food production. The company was founded in 1876 and is headquartered in Indianapolis, Ind.
Dividend Amount: 49 cents
Ex-Dividend Date: Aug. 13
Strategy: Buy Eli Lilly stock and offer to sell the August $42.00 strike or lower call for 67 cents over the intrinsic value. I want to close out the covered option with a profit of about 45 cents, plus the dividend paid by the company.
Large yield stocks, like Eli Lilly at 4.41%, often attract a lot of interest in dividend capturing so the option premium may be hard to get.
If my shares are called away before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about 67 cents. The most I can make is $1.16 if I hold the covered call through option expiration day and the stock gets called away.
The best trades are those that an investor can sell at the offer and buy at the bid.