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Strategies & Market Trends : Dividend Trading/ Upcoming ex-dividend dates -- Ignore unavailable to you. Want to Upgrade?

To: PitBull who wrote (9)	5/11/1998 5:55:00 PM
From: Bill J. Landis	Respond to of 16

Dividend plays ... a very interested idea I hadn't considered before. How exactly does it work? Do you just find a stock that is paying a (preferably large) dividend soon, buy so you can get the dividend, and then sell immediately or soon after (unless you don't have no better place for your money at the time and think the stock can go up)? Has anyone actually looked at this to see if it can really make you much money? A couple interesting twists that come to mind involving options ... If you suspect the stock will go up just before the dividend date (perhaps because of people making a play -- does this price action seem to happen?), buy an option a while beforehand instead of the stock. Perhaps you could even use some kind of a spread with more than one option (not sure though -- too new to options). Combine the Dividend Trade with a covered call. Find the play, buy the stock before the dividend date, but instead of selling right after you get the dividend, write an at or in (perhapd deep) the money call to hopefully get called out, thus making a little extra (the option premium) on top of the dividend, and perhaps some price appreciation. Anyhow, take all the above with a coupla tons of salt since I'm a total newbie just learning about options and investing in general ... haven't even processed the paperwork to be able to trade options yet (but plan to make covered calls my cornerstone once I do). Like the thread, how you think, and your name though enthusiastic, keep it up!! --Bill Landis

To: PitBull who wrote (9)	5/11/1998 11:36:00 PM
From: Jack Chen	Respond to of 16

OK..for the immediate divident play..ARC, it ex-div on 5-13th, you get in tomorrow will collect 71 cents next month. CHV ex. on 5-18th. But remember now, on ex-div day, stock would open lower to reflect the divident's being paid.

To: PitBull who wrote (9)	5/12/1998 10:17:00 PM
From: Wayners	Read Replies (1) \| Respond to of 16

As Mr. Chen points out, when a company pays a dividend, the stock price drops almost exactly by the amount of the dividend. You aren't making any money by collecting the dividend and you are simultaneously incurring taxes on the dividend. Its like having to pay income tax on no income. Shorting a stock or buying puts before a dividend drop doesn't work either. If you short the stock, you have to pay the dividend on the borrowed shares, so there goes the divided payment. Another net zero play. With puts, the price of the dividend immediately gets factored into the price of the puts. The value of the puts goes up exactly by the amount of the proposed dividend as soon as the dividend is announced. If you can buy puts in anticipation of a surprise, not a regular dividend announcement, you CAN make money. Good luck with those predictions though. Its probably easier to predict stock split announcements. All new dividend announcements are posted in the Wall Street Journal everyday. Same table is in the Investor's Business Daily. Take a look. There are also plenty of stock screens that will give you a list of all companies paying more than 8% annual dividend yields. My advice is to forget about playing dividends. Get good at technical analysis and start flipping stocks and when you are really good at flipping stocks, take 10% of your risk capital and flip options with that. You can generate "dividend" sized gains in days with stock flips where you are actually making money. Try buying stocks in anticipation of earnings announcements. Find stocks that are on really long term uptrends like DELL and buy the stock a couple weeks before the earnings release. Sell before the actual earnings are released. Good luck.