MMM -- Dividend Capture

Last Friday, I saw an opportunity for a dividend capture covered call play on MMM. MMM bounced slightly under the $87.50 strike price and was going ex-dividend on Feb 15. What I expected to happen was to pocket the call premium and a little capital gain on a bounce back up, with the call getting exercised just prior to the ex-dividend date. On the eve of the ex-dividend date, the price was up to $87.99, so everything was going as planned. However, surprise! The call didn't get exercised, so I got to pocket the dividend, plus the stock continued to go up and should get assigned over the weekend.

As a result, I ended up with $2,465 for the week -- $1,180 from the dividends, $790 from the call premium, and $495 from the capital gains. So the dividend almost doubled my return, although the position did last a few days longer as well:

Stock Price	Date	Description	Total	xIRR
$87.24	2012-02-10	Buy 2000 shares MMM @ $87.24	-$174,480.00	19.5%
$87.12	2012-02-10	Sell 20 MMM 2/18 2012 $87.50 Call @ $0.41	$790.05	19.9%
$0.59	2012-02-15	Dividend of $0.59 per share	$1,180.00	--
$87.59	2012-02-17	2000 shares MMM assigned @ $87.50	$174,975.00	21.1%

 

V/IWM -- Adjustment

Although I had decided not to trade IWM because I think it's overbought, I decided to simulate trading on it in my OptionsXPress virtual account to see what would have happened if I had continued to trade:

Stock Price	Date	Description	Total	xIRR
$82.96	2012-02-03	Buy 2000 shares IWM @ $82.96	-$165,920.00	--
$82.96	2012-02-03	Sell 20 IWM 2/10 2012 $83.00 Call @ $0.92	$1,810.05	81.7%
$81.42	2012-02-10	Suy 20 IWM 2/18 2012 $82.00 Call @ $0.01	-$49.95	-34.3%
$81.42	2012-02-10	Sell 20 IWM 2/18 2012 $82.00 Call @ $0.75	$1,470.05	2.3%
$82.77	2012-02-17	Buy 20 IWM 2/18 2012 $82.00 Call @ $0.83	-$1,689.95	27.3%
$82.77	2012-02-17	Sell 20 IWM 2/24 2012 $82.00 Call @ $1.45	$2,870.05	30.2%

 

V/MMM -- Adjustment

Although I had decided not to trade MMM because I think it's overbought, I decided to simulate trading on it in my OptionsXPress virtual account to see what would have happened if I had continued to trade:

Stock Price	Date	Description	Total	xIRR
$87.67	2012-02-03	Buy 2000 shares MMM @ $87.67	-$175,340.00	--
$87.67	2012-02-03	Sell 20 MMM 2/10 2012 $87.50 Call @ $0.77	$1,510.05	41.9%
$87.20	2012-02-10	Buy 20 MMM 2/10 2012 $87.50 Call @ $0.08	-$189.95	12.1%
$87.03	2012-02-10	Sell 20 MMM 3/17 2012 $87.50 Call @ $1.54	$3,050.05	16.4%

 

V/IWM -- Adjustment

Although I had decided not to trade IWM because I think it's overbought, I decided to simulate trading on it in my OptionsXPress virtual account to see what would have happened if I had continued to trade:

Stock Price	Date	Description	Total	xIRR
$82.96	2012-02-03	Buy 2000 shares IWM @ $82.96	-$165,920.00	--
$82.96	2012-02-03	Sell 20 IWM 2/10 2012 $83.00 Call @ $0.92	$1,810.05	81.7%
$81.42	2012-02-10	Suy 20 IWM 2/18 2012 $82.00 Call @ $0.01	-$49.95	-34.3%
$81.42	2012-02-10	Sell 20 IWM 2/18 2012 $82.00 Call @ $0.75	$1,470.05	2.3%

 

V/MMM -- Open position

Although I've decided not to trade MMM because I think it's overbought, I decided to simulate trading on it in my OptionsXPress account to see what would have happened if I had continued to trade:

Stock Price	Date	Description	Total	xIRR
$87.67	2012-02-03	Buy 2000 shares MMM @ $87.67	-$175,340.00	--
$87.67	2012-02-03	Sell 20 MMM 2/10 2012 $87.50 Call @ $0.77	$1,510.05	41.9%

 

V/IWM -- Open Position

Although I've decided not to trade IWM because I think it's overbought, I decided to simulate trading it in my OptionsXPress Virtual account to see what would have happened if I had continued to trade:

Stock Price	Date	Description	Total	xIRR
$82.96	2012-02-03	Buy 2000 shares IWM @ $82.96	-$165,920.00	--
$82.96	2012-02-03	Sell 20 IWM 2/10 2012 $83.00 Call @ $0.92	$1,810.05	81.7%