Maybe someone could set me straight about something. I have several covered calls that were sold on XRTX a while back before the "special" dividend news came out and they won't expire until way after the dividend gets issued. My question is this: will those shares still qualify and get the dividend as long as the "call" has been sold against them or do I need to close out that "call" and just basically be sitting on the shares? I have looked at what Investopedia says but, to be honest, am still confused. Any help would be greatly appreciated.
Flip, unless I'm not understanding your total position, if you have covered calls you own matching stock, you took the options premium from selling the calls and the option contract assumes the rest of the risk until end of contract, you make money or not, depending on stock movement up or down.
You will receive the dividend on the shares you own before you sold the calls, ie "Covered call"!
If you own shares, you own stock certificate held by MM or Financial entity.
Hey soulec.......Thanks VERY much for the answer. I think you answered my question. I OWN 500 shares of XRTX that I sold a covered call against. NO margin call, I paid for the shares outright and just deceided to sell a covered call against them to make some extra money. From what you said, since I bought the shares outright and THEN sold a call against them, I WILL get the dividend even though there is a call against them. The call expires in march and will be out of the money at this point but, based on what you said, I'm good to go with that and will go from there. I hope I understood your post correctly, and if so, I'll leave you alone to get back to making some money. If you need to clarify anything else that I may have missed, PLEASE do so but if not, THANKS for your help and hope you have a WONDERFUL holiday and a GREAT 2013.