Anyone ever tried this?

[cswift01]

https://www.investopedia.com/articles/s ... rategy.asp

[mindofmush]

Yes, it works nicely in an IRA account with low transaction costs (like Interactive Brokers).
I use covered calls with as short an expiration period as possible (to get my capital back to setup another one and to avoid earnings reports) to capture both the dividend and the option premium.
Most of my calls are ITM to ensure the trade ends on expiration Friday.
I only make 3% to 6% per month with this strategy, but I only pick 4 star or better Morningstar rated companies to buy.

Covered calls are the lowest level of option trading permission required and almost all brokers allow covered calls in their IRA brokerage accounts. Works in small accounts (<$25,000) too.

Good luck and look up Option Samurai too.

[cswift01]

Yes, it works nicely in an IRA account with low transaction costs (like Interactive Brokers).
I use covered calls with as short an expiration period as possible (to get my capital back to setup another one and to avoid earnings reports) to capture both the dividend and the option premium.
Most of my calls are ITM to ensure the trade ends on expiration Friday.
I only make 3% to 6% per month with this strategy, but I only pick 4 star or better Morningstar rated companies to buy.

Covered calls are the lowest level of option trading permission required and almost all brokers allow covered calls in their IRA brokerage accounts. Works in small accounts (<$25,000) too.

Good luck and look up Option Samurai too.

Very interesting.

Just 3 questions:

1. Would you be able to use your strategy with Robinhood or M1? I'm with Fidelity now, but I'm thinking of heading over to M1.
2. It looks like you are priced $1 p/covered call. Is that correct?
3. Does your strategy take a lot of time p/month?

Thanks!

Me

[mindofmush]

I'm not familiar with M1, so I don't know.
I don't believe that Robinhood handles options yet, so yes you can use Robinhood for Dividend Capture without options. It would be simpler.
Robinhood also doesn't handle IRA accounts yet, so you'll have to keep track of short term capital gains and dividends for the tax year.
Transaction costs at IB varies depending on which market the trade goes through, but it's $.70/option, $.005/stock with $1.00 minimum and no fee on assignments.
I spend about an hour or two each week on this, your mileage may vary.

[mindofmush]

I looked up M1 and

M1 is free like Robinhood and M1 has no options trading like Robinhood

M1 has IRA accounts available and partial share purchase so that all your money is invested.

M1 has only one trade event per day (9:00 am) instead of Robinhood's normal trading schedule.

M1 could work in a simple dividend capture strategy if you could catch all of the chosen stocks in an uptrend. Dogs of the Dow or other longer term strategies would work better with M1's format. You could even adapt a seasonal strategy to M1.