• Like
Options On Dividend Stocks
 

Options On Dividend Stocks

on

  • 472 views

http://profitabletradingtips.com/trading-investing/options-on-dividend-stocks ...

http://profitabletradingtips.com/trading-investing/options-on-dividend-stocks

Options On Dividend Stocks

Long term, conservative investors often prefer dividend stocks. Large cap dividend stocks are commonly very stable and provide quarterly cash payments. But, is there also value in trading options on dividend stocks. Technical analysis of some of these stocks is, frankly, boring. But, how about following fundamentals? How about gap trading when a piece of news affecting the stock hits the market? How about trading options on dividend stocks in anticipation of changes in fundamentals? What comes to mind here are mergers, acquisitions, and economy-driven changes in cash flow and stock value. A couple of examples might be Motorola and Best Buy.

Motorola was the maker of the communication devices going back to the walkie-talkie in World War II. It paid dividends for decades. Then, when it ceased to create sufficiently innovative products, it split up and Google purchased its mobility division for the patents. Trading options on dividend stocks of this sort is not really trying to outguess the market. Motorola was in trouble for some time and under pressure to find ways to use its patent base to create value for stockholders. Anyone holding call options on the company when the takeover by Google was announced did well.

Best Buy is the largest seller of consumer electronics in the USA. It has a foothold in China as well. However, the recession is catching up to the company and profits have lagged. Best Buy is closing stores and tightening its belt. This includes a cut in executive stock options. Trading options on dividend stocks of this sort can be profitable as well. There is talk of a buyout. However, the original owner is still far and away the majority shareholder and is probably not interested in selling his baby. Nevertheless stranger things have happened. Trading Best Buy as it closes stores could be profitable. In this case technical analysis should be useful as the store is not going out of business and investor sentiment may overshoot, either up or down.

When trading options on dividend stocks the anticipated dividend payment is always included in the option price. When there is an unexpected and large change in dividends it profits those who trade options on dividend stocks. And, when a successful company such as Apple decides to open its treasury and pay dividends for the first time it does two things for investors as well as smart options traders. The stock price may well go up based upon the precise value of anticipated dividend payments. The stock price may also respond to the knowledge that the company is now operating under a different set of rules. As in all stock trading, when trading options on dividends stocks it is important to do your homework, gain perspective and anticipate the market.

Statistics

Views

Total Views
472
Views on SlideShare
471
Embed Views
1

Actions

Likes
0
Downloads
1
Comments
0

1 Embed 1

http://www.slashdocs.com 1

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Options On Dividend Stocks Options On Dividend Stocks Presentation Transcript

    • Options on Dividend Stocks
    • To see a complete version of this presentationand to obtain our free EBook follow this link:http://portal.sliderocket.com/BLOUC/Options-On-Dividend-StocksRead the Forex Conspiracy Report for insightsinto trading foreign currencies. Get your copy athttp://portal.sliderocket.com/BLOUC/Options-On-Dividend-Stocks
    • Long term, conservative investors often preferdividend stocks.Large cap dividend stocks are commonly verystable and provide quarterly cash payments.But, is there also value in trading options ondividend stocks. www.ProfitableTradingTips.com
    • Technical analysis of some of these stocksis, frankly, boring.But, how about following fundamentals?How about gap trading when a piece of newsaffecting the stock hits the market? www.ProfitableTradingTips.com
    • How about trading options on dividend stocksin anticipation of changes in fundamentals?What comes to mind here aremergers, acquisitions, and economy-drivenchanges in cash flow and stock value. www.ProfitableTradingTips.com
    • A couple of examples might be Motorola andBest Buy.Motorola was the maker of thecommunication devices going back to thewalkie-talkie in World War II. It paiddividends for decades. www.ProfitableTradingTips.com
    • Then, when it ceased to create sufficientlyinnovative products, it split up and Googlepurchased its mobility division for thepatents. www.ProfitableTradingTips.com
    • Trading options on dividend stocks of thissort is not really trying to outguess themarket.Motorola was in trouble for some time andunder pressure to find ways to use itspatent base to create value for stockholders. www.ProfitableTradingTips.com
    • Anyone holding call options on the companywhen the takeover by Google wasannounced did well.Best Buy is the largest seller of consumerelectronics in the USA. www.ProfitableTradingTips.com
    • It has a foothold in China as well.However, the recession is catching up to thecompany and profits have lagged.Best Buy is closing stores and tightening itsbelt. www.ProfitableTradingTips.com
    • This includes a cut in executive stockoptions.Trading options on dividend stocks of thissort can be profitable as well.There is talk of a buyout. www.ProfitableTradingTips.com
    • However, the original owner is still far andaway the majority shareholder and isprobably not interested in selling his baby.Nevertheless stranger things have happened.Trading Best Buy as it closes stores could beprofitable. www.ProfitableTradingTips.com
    • In this case technical analysis should beuseful as the store is not going out ofbusiness and investor sentiment mayovershoot, either up or down.When trading options on dividend stocks theanticipated dividend payment is alwaysincluded in the option price. www.ProfitableTradingTips.com
    • When there is an unexpected and largechange in dividends it profits those who tradeoptions on dividend stocks.And, when a successful company such asApple decides to open its treasury and paydividends for the first time it does two thingsfor investors as well as smart options traders. www.ProfitableTradingTips.com
    • The stock price may well go up based upon theprecise value of anticipated dividendpayments.The stock price may also respond to theknowledge that the company is now operatingunder a different set of rules. www.ProfitableTradingTips.com
    • As in all stock trading, when trading optionson dividends stocks it is important to doyour homework, gain perspective andanticipate the market. www.ProfitableTradingTips.com
    • Although dividend stocks may be favoritesof the long term investor they can alsoprovide profits for traders of stocks andstock options. www.ProfitableTradingTips.com
    • As always we are not promoting theindividual stocks listed above but rather offerthis discussion as an example of thinkingthrough stock trades. www.ProfitableTradingTips.com
    • For more insights and useful informationregardingstock, options, commodities, and futurestrading visit
    • www.ProfitableTradingTips.com