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7 Dividend-Capture Ideas Using an Option Hedge

Comerica (CMA)

 Comerica, through its subsidiaries, provides financial products and services.

   Yield: 2.04%
   Dividend Amount: 15 cents
   Ex-Dividend Date: June 13, 2012
   Beta: 1.21

Strategy: Buy Comerica stock and sell the June $29.00 strike or lower call for 79 cents over the intrinsic value.

After qualifying for the dividend, I will attempt to close out the trade with a gain of near 23 cents, plus dividend.

If my shares are called away before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about 79 cents. The most I can make is 94 cents if I hold the covered call through option expiration day and the stock gets called away.

   Motorola Solutions (MSI)

 Motorola Solutions provides communication infrastructure, devices, software and services.

   Yield: 1.84%
   Dividend Amount: 22 cents
   Ex-Dividend Date: June 13, 2012
   Beta: 1.63

Strategy: Buy Motorola Solutions stock and sell the June $46.00 strike or lower call for 95 cents over the intrinsic value. I will look to close out the covered option with a gain of about 50 cents, plus dividend.

The most I can make is $1.17 if I hold the covered call through option expiration and the stock gets called away.

   Ecolab (ECL)

 Ecolab develops and markets programs, products, and services for the hospitality, food service, health care, industrial and energy markets.

   Yield: 1.24%
   Dividend Amount: 20 cents
   Ex-Dividend Date: June 15, 2012
   Beta: 0.69

Strategy: Buy Ecolab stock and sell the June $62.50 strike or lower call for $1.08 over the intrinsic value. I will look to close out the covered option with a gain of about 45 cents, plus dividend.

If my shares are called away before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about $1.08. The most I can make is $1.28 if I hold the covered call through option expiration day and the stock gets called away.

DISCLOSURE: Author does not hold a position in any stock mentioned.
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