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6 Best Choices for Dividend-Capture

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Hewlett-Packard Company (HPQ - Get Report)

The company was founded in 1939 and is headquartered in Palo Alto, Calif.

Yield: 2.46%
Dividend Amount: 13 cents
Ex-Dividend Date: June 11, 2012
Beta: 1.09

Strategy: Buy Hewlett-Packard stock and offer to sell the June $20.00 strike or lower call for 31 cents over the intrinsic value.

I will attempt to close with a gain of near 9 cents, plus the dividend earned.

I don't want the dividend capture trade unless the option sale will provide at least the minimum 31 cents over intrinsic value.

If my shares are called away before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about 31 cents. The most I can make is 44 cents if I hold the covered call through option expiration day and the stock gets called away.

Author is long HPQ at the time of writing. No positions in any other stock mentioned.

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