Thu, Jul 31, 2014, 6:03 PM EDT - U.S. Markets closed

Recent

% | $
Click the to save as a favorite.

American Capital Agency Corp. Message Board

you are viewing a single comment's thread.

view the rest of the posts
  • sbrown101750 sbrown101750 Dec 10, 2010 6:44 AM Flag

    Covered Call Question

    On regular quarterly dividends, the strike prices are not adjusted. However, don't expect that a covered call will protect you very much when the stock goes ex-dividend. The delta of the Jan 30 call is .64 with extrinsic value of $1.42. (Isn't is interesting that the extrinsic value of the option almost equals the expected amount of the dividend?)

    When the stock goes ex-dividend, most of the price change due to the dividend will be absorbed into the extrinsic value of the sold option. The delta of your sold option will increase and you will end up losing most of the dividend in the value of your position anyway.

    You learn quickly that the Market Makers don't allow many free lunches in this business.

 
AGNC
23.12+0.19(+0.83%)Jul 31 3:59 PMEDT

Trending Tickers

i
Trending Tickers features significant U.S. stocks showing the most dramatic increase in user interest in Yahoo Finance in the previous hour over historic norms. The list is limited to those equities which trade at least 100,000 shares on an average day and have a market cap of more than $300 million.