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7 Dividend-Capture Ideas Using an Option Hedge

Comerica(CMA - Get Report)

 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 - Get Report)

 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 - Get Report)

 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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SYM TRADE IT LAST %CHG
ARCC $16.58 0.61%
CMA $51.49 -0.94%
ECL $112.81 -0.34%
DLR $68.97 0.74%
MSI $57.51 -0.16%

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DOW 17,730.11 -27.80 -0.16%
S&P 500 2,076.78 -0.64 -0.03%
NASDAQ 5,009.2140 -3.9090 -0.08%

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