I bought SPY at 111.64, and sold-to-open SPY 108 June-30 expiration calls at 4.08 for a net investment (debit) of 107.58. I used the quarterly SPY options because I could go considerably deeper in the money with the calls and still get a premium that is close to the likely SPY dividend for this quarter (around $0.50). Schwab does not appear to offer access to this series of options, but Fidelity does.
If SPY stays above 111 through this Thursday I expect these options will be assigned–because the premium left on the calls will be less than the dividend the stock will payout. Friday is the ex-dividend date for SPY. If the calls are assigned I’ll collect $0.42 per share. If the options are not assigned, I will collect the SPY dividend–lowering my breakeven point to around 107.08.
For more info on this dividend capture strategy see this post
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