If you have general questions about dividends see Top 10 questions about dividends. One strategy for capturing dividends is to buy the stock/ETF and then sell calls against that security as a hedge—a covered call. The value of the short calls moves in the opposite direction of the stock/ETF, providing a hedge. There are three major variables with this strategy: 1. How many days before …
Advantages of ETF index funds over mutual funds index funds: Management fees are usually lower. For example for inflation protected bonds the Schwab mutual fund SWRSX has a .5% expense ratio and the iShares Barclay equivalent TIP has an expense ratio of .2%. Instead of trades executing at the end of the day they can be bought or sold at any time the market is …
I know that analogies usually confuse more than they help—but that’s not going to stop me from trying… Imagine that you are the season ticket holder of 4 good seats for a major league football team at the beginning of the season. A lot of people think the team is headed for the Superbowl, but you are pessimistic. You’d like to cash in on the …
In a recent post I gave an overview of dividend capture strategies. In some situations, an effective way to hedge risk with a dividend capture strategy is to use covered call options. If you are not familiar with options this might sound exotic, but it’s truly the training wheels of option trading. With covered calls, you can introduce yourself to the conservative, hedging possibilities of …
In trying to capture dividends there is no free lunch. In fact, since Wall street is involved, the best you can hope for is an affordable lunch. I have looked at, and tried quite a few approaches—most of which don’t work, but I have found one approach that does work with some ETFs. Ironically you don’t actually collect the dividend most of the time, but …
