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Sunday, February 28, 2016

Criteria for Identifying Dividend Capture Covered Calls Opportunities

Recently, I have received some emails essentially asking: "How do you identify covered calls investment opportunities with dividend capture potential?"

The Covered Calls Advisor has established a set of criteria to identify situations that are advantageous for establishing covered calls positions that have the potential to achieve attractive returns from either an early assignment or from assignment upon next month's options expiration.

First, I utilize my broker's (Schwab) stock screener software to identify an initial list of candidates that meet the criteria in items #3, 4, and 5 below.  I then narrow the candidates list to only those that meet criteria #1.  Finally, I evaluate each of the remaining stocks (usually fewer than 10 companies) against all eleven criteria and will seriously consider investing in any that are 'YES' on nine or more of the eleven criteria.

Recently, I established a dividend capture covered calls position in Tesoro Corporation: Link.
The criteria below for this Tesoro position met ten of the eleven criteria for this investment.

As always, feel free to email me (email address shown in right sidebar of this blog) with any comments or questions.

Regards and Godspeed,