Calls and Puts for Income Message Board

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Strategies & Market Trends : Calls and Puts for Income

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To: tom pope who wrote (5600)

12/4/2012 6:04:32 PM

From: Bocor

of 5891

I'm not sure I understand why an impending special dividend should create an opportunity to profit from put sales

Well, I don't really see the opportunity in the article, but I think there ARE opportunities. For example, a stock like SDRL, that went ex-divvy today, lost close to 5% at it's low because the divvy is high, and they are distributing two divvy's in Dec., so selling Dec. puts, say the 36's, can give you less risk after the actual price has already been discounted.

Selling puts between now and the end of this month's cycle IMO should only be done on stocks you are prepared to own, even if only for a short period. Will there be a huge fiscal cliff sell off?

No one knows, and premiums I watch don't seem to reflect that risk.

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