This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

5 Dividend-Captures With Option Trades

The Travelers Companies, Inc. (TRV)

The company was founded in 1853 and is based in New York City.

Yield: 2.85%
Dividend Amount: $0.46
Ex-Dividend Date: June 06, 2012
Beta: 0.68

Strategy: If you are bullish with The Travelers Buy the June $60.00 strike call for 20 cents over the intrinsic value. The Travelers doesn't trade ex-dividend for almost three weeks. Expected time decay is less than 15 cents. For less than a penny a day you can gain exposure to The Travelers with a maximum risk of about $4.50. If the wheels fall of Europe and the markets fall apart, buying the call options limits your risk to less than a 10% downward move compared to buying the stock outright.

Kohl's Corporation (KSS)

Kohl's Corporation operates department stores in the United States. The company was founded in 1962 and is headquartered in Menomonee Falls, Wis.

Yield: 2.66%
Dividend Amount: $0.32
Ex-Dividend Date: June 04, 2012
Beta: 0.85

Strategy:

Buy Kohl's stock and offer to sell the June $46.00 strike or lower call for 50 cents over the intrinsic value.

If my shares are called away the day before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about 50 cents. The most I can make is 82 cents if I hold the covered call through option expiration day and the stock gets called away.

Occidental Petroleum Corporation (OXY)

Occidental Petroleum Corporation engages in the exploration and production of oil and gas properties in the U.S. and internationally. The company operates in three segments: Oil and Gas; Chemical; and Midstream, Marketing, and Other. The company was founded in 1920 and is headquartered in Los Angeles, Calif.

Yield: 2.58%
Dividend Amount: $0.54
Ex-Dividend Date: June 06, 2012
Beta: 1.16

Strategy:

Buy Occidental Petroleum stock and offer to sell the June $75 strike call for $1 over the intrinsic value. For a more aggressive approach sell the June $80 strike call for $2.85 over the intrinsic value. Occidental appears oversold based on technical analysis. While I am long-term bearish oil, I believe the odds favor a bounce higher for Occidental.

If my shares are called away the day before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about $1 with the $75 strike and $2.85 with an $80 strike.

At the time of publication, the author held no positions in any of the stocks mentioned.
3 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters