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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: William S. who wrote (10987)6/7/1999 4:45:00 PM
From: Herm  Read Replies (2) of 14162
 
Sure Thing Bill,

Dividend Stripping and CCing

As the stock approaches the ex. div. date the stock price will start to increase. Make sure you check out the previous div. dates using the charts set with the RSI and BB to determine how much lead time you may need and how fast the stock moves. The technique of jumping into div. paying stocks before the payout is called "dividend stripping." After the payout the stocks usually pulls back as folks jump ship and move on to their next stock.

So, you have to get into stock while the price is low. You then can decide when to write a CC and not get called out before you collect the dividend. I would say you want to write the CC at the peak price move before the pull back so that the CC premies will hedge the pull back. Basically, your CCer is paying for your downside insurance.

Hope that gives you a better idea.
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