terryelrod

That's interesting Marco. Thanks for your time and effort. There are not a lot of stocks that report dividends greater than 10% so this may not be a big opportunity, but a possibility. Thanks again.

Thanks for your time Marco. I went to finviz.com and entered a screen to look for stocks with dividends this month that were greater than 10% with a price of at least $20 (a price of over $50 gave me only one stock). I went through the list of 11 possibles to be sure they had options with enough open interest to work with. The following are possibilities: AGNC, dividend = 11.8% BPT, dividend = 12.43% NTI, dividend = 19.61% SDRL, dividend = 10.14%

I didn't understand the author to be addressing risk as much as just having an edge because the long calendar leg would have a lower price than normal relative to the short leg. Kinda like having a volatility skew working in your favor.

I was just looking at the optionistics website and came across this article: http://www.optionistics.com/s/stock_dividends. It discusses trading calendar spreads based on the concept that stock price, and therefore option price, is discounted after ex-dividend date. So the short leg of the calendar would be an option that expires before the ex-dividend date, since it's price would not be discounted. The long leg of the calendar would be an option with an expiration subsequent to the ex-dividend date, with a discounted price. With my limited knowledge, this strategy seemed logical. Just wondered if anyone here had investigated this strategy.

Thanks very much for your response, Kim. I will think about using the credit for long calls.

I'm a new member of Steady Options and hope this is not an inappropriate place to discuss this issue, but I entered a trade yesterday with VIX options. I know that many here are very knowledgable about these trades and I'm hoping for some feedback. I am following the Steady Options trades but also have some long call positions. As I watched the SPY as it was dropping 40 points yesterday I started looking for a hedge against further erosion of my long call positions. I didn't want to exit them because I am still expecting a rebound with them. But I wanted some insurance. With volatility higher I wanted to sell a call spread on a stock, so if the market continues to drop I would profit and help with a loss on my long calls. It was difficult to find a spread that would pay much of a credit. I ended up looking at the VIX. Selling a $16 Feb put and buying a $15 Feb put provided a credit of $70 per option contract. So max loss if the market goes up and VIX goes down is $30 per contract (but of course then my long call positions will profit). If the market goes down and VIX up I can keep at least some of the $70 credit per option and help with the loss on my long call positions. IV for the Feb $16 put is around 140% and IV for the Feb $15 put is about 125%. Any advice or feedback would be greatly appriciated. I think what I did will help me, but I may be missing something.