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Author: jkens Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1203  
Subject: Selling covered call on dividend stock Date: 11/21/2012 2:21 PM
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Example:

I own 200 shares xyz stock bought at $27.
It pays a 5% dividend if held until end of December.

I sell 2 Jan, 2013 call options of this same xyz stock at a strike of 30 for $2 ($200).

Now, lets say the stock rallies to $35 between now and Jan expiration of the option.

Questions:
- In January, I get the 5% divi for the 200 shares I own, am I responsible for any of the divi for the options sold?

- If the stock rallies above $30 before the Jan options expire, like in Dec, can they be called away prior to the option expiration date? Could they be called away in Dec resulting in me no longer being eligible to receive the divi?
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