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STX dividend capture – triple play

We are opening a new triple play – dividend capture trade against STX (Seagate technology) stock.

The stock has ex-dividend on March 20th so we must become owners of the stock before that day. This goes perfectly with the March 17th options expiration. We can sell naked (or cash secured) puts, collect premium, and let the puts expire in the money, get assigned to the stock and become owners on Saturday, March 18th. We then will be eligible to collect dividends.

The stock pays 0.68 quarterly dividend, so our 100 shares would pay $68 additional dollars.

I decided to sell naked puts but also a naked calls, high enough for the calls to expire OTM:
 

STO 1 STX Mar17 48.50 put
STO 1 STX Mar17 50.50 call
@ 1.17 credit limit DAY
 

We collected 0.92 dollars for the puts side and 0.25 dollars for the call side.

We will let the calls expire OTM (if the stock rallies hard, we will roll them) and we will let our puts expire OTM and get assigned to the stock. If the stock moves higher, we may roll the puts higher too or let them expire OTM and buy the stock outright.
 

STX triple play 1

STX triple play 2
 

 

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