Creating another "dividend" on NAB

by Michael Gable 30 May 2012

NAB goes ex-dividend tomorrow for 90c fully franked. Currently it is trading at $23.90. Once it goes ex-dividend, all else being equal, it should trade tomorrow at $23, having dropped by the dividend amount.

I have taken the view that NAB will continue sliding over the next few weeks once the stock is ex-div. As a result, this afternoon I have sold a $22.51 call option for June. By selling this option, I have picked up a 95c premium today and I am still entitled to tomorrow's 90c dividend. If NAB is below $22.51 at expiry on 28 June, I keep the 95c premium. Therefore I have effectively created another dividend with my NAB shares!

Disclaimer

Disclaimer: Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.
 

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