beginners corner

Ask Alan 200: How to Avoid Early Exercise of Covered Call Options When Trying to Capture Dividends

Alan answers a question posed by Graham, who asks:

Alan,
I bought NRZ to sell covered and to capture a hefty of 10% a year. Unfortunately, the option was exercised and I missed out on the dividend but did receive a nice premium. I’ve attached the trade specifics. Could I have avoided early exercise and how?
Thanks,
Graham

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This video analyzes the combined strategies of with capture. Included in the video are discussions of dates, with the BCI Trade Management Calculator along with the pros & cons of early exercise from the perspectives of both the and seller.

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About Alan Ellman

Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies.

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