Semi Equipment Analysis Message Board

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Technology Stocks : Semi Equipment Analysis

SOXX 301.15

-1.2%

Dec 31 4:00 PM EST

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To: Gottfried who wrote (17590)	8/4/2004 12:07:28 AM
From: Sun Tzu	Read Replies (1) of 95657

I've never heard of option adjustments due to dividends. But what is likely to happen is that the call will be exercised in advance of the dividend, so your profits will really be $1.95 minus commissions. If MSFT makes it to say 30 by Dec, then the option buyer has made better trade than you. Either way, you are only going to get compensated for the carry risk, which is the same as for selling any covered calls. What you could do, and I have not really checked the prices to see if it makes sense, is to buy in the money puts for right after the X-dividends day and sell the covered puts for just before the X-dividends date.

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