Tuesday, March 12, 2013

Ex-dividend Day and Deltas on MRK, UNH, and URS

I have three positions that will go ex-dividend tomorrow, on March 13:  MRK, UNH, and URS, and each has an April covered call written against it.  I thought I might take a quick look at the deltas on these positions to estimate whether any of them might be called early – a full month early in this case.

The details of the three positions are:
·         MRK, ex-dividend 3/13, April 44 call out of the money
·         UNH, ex-dividend 3/13, April 57.50 call out of the money
·         URS, ex-dividend 3/13, April 40 call in the money

I looked up the Deltas this morning and found that the MRK contract is 48%, the UNH 17%, and the URS is 100%. From this I conclude that the $130 I will collect from MRK and UNH is safe, but the URS dividends, totaling $84, may go to some new owner if the calls are exercised today. 

It still seems a long way out for an early call, but it is reasonable to think that the URS shares could be called away.  I’ll watch carefully and report in my next post.

No comments:

Post a Comment