Sunday, December 19, 2010


Here is an interesting trade for DITMers - a variation on a variation of covered call writing (or (non)-standard deviation for technicians:
Mattel pays an Annual dividend, not quarterly; many other stocks also do, especially pharmas and foreign stocks (note tax consequences - apparently UK stocks have a no tax agreement with the US).
Still a WIP (work-in-progress), I bought MAT, Mattel the toy company, the end of Nov., just before ex-D, and sold the
April call:I got paid its annual dividend last week. Now my choice is close the trade out now for a SURE 21.4% annualized profit (1.78 X 12months), or hold to milk the small call premium until called away in April at 24 (unless the stock is below 24), for a 12.73% annualized profit, but slightly more $$. Here is the trade:
Bot 500 MAT @ $25.54 $12,779
Sold 5 calls -April 24 for $1051
Received div'd - $415
If called in April at $24, $11,991 -after commission
Net $678, or 5.3% in 5 months. Divide by 5 , then multiply by 12 to annualize:12.73

Monday, buy calls to close (higher than sold), at $2.55 for $1285, up from $1051
Sell stock at $25.67, also higher, for $12,826; receive $415 div'd - net:$228.
$228 divided by initial stock purchase of $12,779= 1.78%, times 12 months: 21.4%.
Now if I can just find 11 more stocks with annual or semi-annual dividends!!! Feel free to email me if you know if any.

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