Tuesday, September 4, 2012

September 2012 Dividend Forecast

I like to take a look at what dividends I can expect early in the month.  Doing this serves two purposes - first, I get a sense of how much work I need to do with the covered calls to make my revenue target in the Rescue My Account, and second, I can get a sense for whether I will see some early calls on the underlying shares, where I might have a September contract written against an in-the-money position.

Last month I began trying in earnest to get a better sense of how to predict early assignments on ex-dividend dates - I've been lucky a few times before, and since the expedited returns were so good in those instances it is definitely a process I would like to figure out how to manage better and make more predictable.

Of the four "ITM" positions, GE and VIAB have September contracts - in fact, the GE ex-date is the day the September contracts expire.  So, assuming that the stock stays ITM through the term of the contract, it is very likely it will be assigned early, coincidentally, the same day as the contract would have expired anyway.

The VIAB estimate is more complicated, since the ex-date is about 10 days before options expire.  But that position is pretty far ITM compared to the dividend, so I would expect that to be assigned.

As for the other ITM position, ITW, I have a January contract, so it's not going to be called away.  I have an Oct 35 on 100 of the URS shares, so that portion of that 400 share holding could be called also.

I'll post again about some of the analysis I have been doing on this process later in the month.  We'll see how the findings hold up with these positions as well.  More to come.

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