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6 Best Choices for Dividend-Capture

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NYSE Euronext (NYX)

NYSE Euronext, through its subsidiaries, operates securities exchanges including NYSE. Yield: 4.88% Dividend Amount: 30 cents Ex-Dividend Date: June 13, 2012 Beta: 1.63

Strategy: Buy NYSE Euronext stock and offer to sell the June $25.00 strike or lower call for 59 cents over the intrinsic value.

The option may get exercised early for a gain. In almost all cases, I sell the call option first to ensure the stock option leg is complete. If not, after qualifying for the dividend, I will look to close out the covered option with a gain of about 21 cents, plus the quarterly dividend paid by the company.

If my shares are called away before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about 59 cents. The most I can make is 89 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.

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