Jeff Maynard
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Editor: Jeffery Maynard Dividend Capturing Trades The most common way that we will capture the dividend value is buying the stock 3 to 5 trading days before the ex-dividend date and selling the day before the ex-dividend date. With this technique, we will gain the increase in the stock price prior to the ex-dividend date and end our trade with a capital gain without receiving the dividend. So, while we call this service our “Dividend Capturing” service, in fact, many times we don’t actually capture the dividend. Instead we will capture about the same “value” of the dividend by utilizing precise entry and exits points as these dividend paying stocks’ volatility allows us to make trading gains in the days just prior to the ex-dividend date. The secret is the volatility that these stocks have in the weeks prior to the date they go "ex-dividend". The expertise is knowing when to buy and when to sell. And we provide you with all the details with exacting precision so that you have the opportunity to proft on these trades. We can do this due to the fact that these stocks tend to have price volatility. Over a 12-day period Jeff was able to get his members in and out of a “dividend play” 3 times on the same stock. In fact, it was only on the third trade that Jeff and his members actually did capture the dividend. The first 2 trades we simply profited from the price volatility of the stock. On the third trade we gained by locking in the dividend. For stocks that have a high quarterly dividend and also trade options, we may use a variation of the above method but instead of selling the stock, we will sell “in the money”or “at the money” call options against our position if there is a premium on the call option. In many cases whoever purchased our option, if it is in the money, will exercise the option on the close of trading the day before the ex-dividend date; thereby, capturing the dividend. We gain the capital appreciation on the stock, plus the option premium and let the option buyer receive the dividend. With this technique, we accomplish a variety of goals: first, as in the buy and sell technique, we will receive some appreciation in the stock price before we sell the options; second, we gain the premium on the call options that we sold; and, third, should the stock price drop below our purchase price, the option premium helps shield us from taking a loss. If a stock appears to be severely undervalued, we may hold the stock through the ex-dividend date and actually capture the dividend as well as any appreciation that we have in the stock itself. Our time frame for holding these dividend plays depends on the type of play we are using. For the Standard Dividend Play, we expect to be in the position for no more than 3 to 5 trading days. For the Stock Option Play, the time frame will vary from 3 to 5 trading days to as much as a month. This will depend on when the option we sold is exercised. We will only sell the options closest to expiration. For Undervalued Stocks, once again, we may hold our position from just a few days to a few weeks, depending on how the stock is performing. In all of these dividend plays our goal is to capture value to at least the value of the dividend. (e.g. if we purchase General Motors, which has a quarterly dividend of $.50, then we are playing it to generate a total return of $.50 through stock gains, option premiums, and possibly, the dividend itself.
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