A HEDGED DITM TRADE:

J.P.Morgan goes ex-dividend October 3 at just under 3%, with a nice "extrinsic" call premium to lock in. Adding to the 10% return is a Credit Ratio Put Spread (2:1) to almost eliminate any losses until next March.

                        DITM: (DEEP-IN-THE-MONEY) COVERED CALLS

Stock: J.P.Morgan (JPM) - $41.40

Buy 100 shares - $4140

Sell 1 March 38 in-the-money call option at $4.60 ($460)

Receive 2 dividends at $30 each (ex-dividend dates Oct.3, Jan.3)

Stock called away in March (5 months) at $38 ($3800)

COST                                                 RETURN

4140                                                    460

                                                             60

                                                            3800

4140                TOTAL                      4320

                        NET RETURN           180

% RETURN: (180 DIVIDED BY 4140): 4.35%  over 5 months, or 10.44% over 12 months (annualized).PLUS a Safety Net of over 3 points to $38. If stock (over all market) starts to weaken, employ this hedging strategy - must have Spread Option Approval Level:

Buy 2 March 34 puts at $.90 (180)

Sell 1 March 38 put at $1,80 (180), for zero cost.

Worst possible scenario: JPM drops to $34 (anything below is frozen); Long 34 puts expire worthless, Short 38 put is exercised - take on 100 JPM at 38 ( loss is $400 minus $180 return -see above).  Max loss $220. Do a DITM withSept.31 call; next ex-dividend date: April 3?.