Bookmark and Share 10, Weekly Dividend Income June 9 to June 13

This week there are 10 companies going ex-dividend who also have weekly options available. They are: AMT, FDO, HES, KO, M, MRK, NOV, UNH, UNP and WMB.

Using Born To Sell's weekly option screener with the default settings we find these companies going ex-dividend tomorrow:

weekly options with dividends for June 11

Over half of those are in-the-money (the ones with darker grey in the Call Strike column), and all of them have an annualized yield (including the dividend) of more than 45% (far right column).

For the following day, June 12, we have:

weekly options with dividends for June 12

And for Friday, June 13, we have:

weekly options with dividends for June 13

Note: These are not recommendations. These are merely all the weekly options that have ex-dividend dates this week. You would need to research each to see if it is appropriate for your portfolio. However, if you sell an in-the-money call against your position that expires in a few days then you may not be holding the position very long.

Three things to be aware of if you implement a dividend capture strategy with weekly options:

  • (1) If you have an in-the-money option with very little time premium in it on the day before ex-dividend, then the option holder may elect early exercise so that he can capture the dividend. However, if there is more than a little time premium left (more than a few pennies) then the option holder will probably not elect early exercise (since he forfeits all remaining time premium when he exercises. See Will I Be Assigned?).
  • (2) Market makers will reduce the opening price of the stock by the amount of the dividend on the morning of the ex-dividend date. So, if you have a stock close at $40 on the day before ex-dividend, and if it pays, for example, a 50 cent dividend, then the next morning (the ex-dividend date) the stock should open around $39.50 ($40 minus the 50 cent dividend).
  • (3) Transaction costs for these short-term trades can add up. Depends where you trade.

Finding weekly options with ex-dividend dates prior to the weekly expiration is quick and easy with our screener. To reduce risk, you can exclude those that have an earnings release prior to expiration by unchecking the Earnings Before Expiration filter in the Include section of the Advanced Filters.

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