I am currently going long on the stock. Soon, I will be collecting my $5.12 dividend.
I am thinking of writing covered calls on my outstanding shares to collect another $5 for $32 strike price(Dec 2012 option). Would I be "paying" the dividend if I write the covered call? Or would I be collecting a total of $10.12 ($5.12+$5) if I choose to take this route by doubling on the gains on this trade?
Here's what will happen...
Your shares will be "called" away and you will no longer have a position here.
This is why "call" options are called "call" options.
Furthermore, the new owner(s) of your stock will now collect the dividend.
Did this answer all of your question(s)?
Oh, and thus the call buyer will make around 75% in one months time!
And you will only make back a small portion of your commissions expenses.
(This answer is only applicable if these shares participate in the pending year end rally)