Covered Strangle for Dividend Capture Enhancement (75% prob)

2019年3月5日

Bought 100 RCL for 118.25
Ex-Dividend is tomorrow and dividend is .70, so If I have the stock by tomorrow I will receive the dividend.

To enhance the trade I also Sold the 115/119 Strangle for an additional $1.1 with 3 days to expiration (That's how long I will be in this trade)
Max win would be $185 for the covered strangle plus $70 for the dividend = $255

My break even counting the dividend is 116.45
So I have 1.5% protection to the downside.

This gives us about 75% probability to make money

2019年3月8日

トレード稼働中

Today was the expiration date for the strangle and I was down on the trade so I decided to roll the Strangle to extend time to be right into the next expiration in 7 days and received an additional $1.50 credit.

In total, I have collected $2.65 from options + $0.70 from the dividend so my new break even is 114.90.

2019年3月13日

トレード終了: 利益確定目標に到達

After the price down adjusting for the dividend, we got a bounce and I decided to closed the shares at the same price I bought them (118.25) for a net gain of zero from shares.

However, I ended up taking the credit of the strangle and roll for $2.65 and closed it for a debit of .60. That leaves us with a win of $2.05 from the Strangle plus .70 from the dividend for a total of $275.

2019年3月13日

ノート

Another important point about this strategy:

By doing this strategy I just got in credit and dividend 3.9x times the dividend amount paid quarterly. So in essence in just 8 days I got 97.5% of the dividends to be received in a year and thus minimizing the risk of a big price movement against the position.