ROI for Buy/Writes on Dividend Stocks

Discussion in 'Trading' started by NoDoji, Jul 14, 2008.

  1. 1) BPT is so good, you mentioned it twice!
    2) Atleast you're in a "hot" sector.
    3) If crude oil ever goes down, you do realize those payouts WILL be reduced making those issues fall even faster. The capital loss can greatly exceed the dividend once again.
     
    #11     Jul 14, 2008
  2. NoDoji

    NoDoji

    Ha! Was supposed to be PBT in there. I'm perhaps lysdexic...
     
    #12     Jul 14, 2008
  3. Don't forget ETF's like the QQQQ, SPY, IWM etc. If you're going to be actively writing calls you'll need a liquid options market with tight bid-ask spreads.
     
    #13     Jul 15, 2008
  4. That is the problem. Once the dividend yield goes into double digits the dividend is usually cut or eliminated and the stock keeps going down. The exception to this is at a major bear market bottom when buying stocks with double digit yields gives impressive returns in the following bull market.
     
    #14     Jul 15, 2008
  5. You are correct once again. Then again, your new trading objective becomes capital gains instead of dividends and call option premiums. :cool:
     
    #15     Jul 15, 2008