![]() In a pricey market, weaEURtmre probably happy to make this trade. Our tradeoff is that weaEURtmll give up some upside in exchange for the call premium. Īs always, thereaEURtms no free lunch in the markets. They donaEURtmt have to worry about the clock. With each passing day, the sellers grow richer. ThataEURtms bad for buyers, but great for sellers like us. With each day that passes, call and put options (the rights to buy or sell a stock at a certain price) decay in value. Speaking of options, they are a better way to practice the dividend payout capture weaEURtmre seeking. The Real Inefficiency: Options aEURoeDecayaEUR ![]() We should buy and sell puts and calls to magnify the price ticks that occur before and after the dividend date. aEURoeTrue believersaEUR in the strategy will argue that the real way to employ it is with options. WhataEURtms in a Name? Underperformance in This CaseĪll right, letaEURtms stop being so basic ourselves. Misguided dividend capture investors would have been better off buying a high quality income fund such as the Vanguard High Dividend Yield Index ( VHDYX ) : Sounds fancy but again, it doesnaEURtmt work. Supposedly they look for high quality dividend stocks and time their entries using aEURoetechnical analysis to identify rates of change, trend input, cycle analysis and economic factors.aEUR To be honest IaEURtmm not actually sure what the fund does. Then we have the Rational Dividend Capture A ( HDCAX ) fund, which employs the name but not the strategy. Their net effect is the aEURoemarketaEUR pricing in the future dividend at any given moment. TheyaEURtmve been bidding the price up slowly for weeks and even months. Well, again, weaEURtmre not the only investors who have this idea. LetaEURtms buy the stock a week or two ahead of its dividend date. In fact, the stock is probably aEURoeoverpricedaEUR by the amount of the dividend itaEURtms about to pay! They already own shares and they are selling at an inflated price. WeaEURtmre just trying to capture the dividend without holding the stock for very long.īut can we really buy a stock the day before its dividend date and pull this off? Unfortunately for us other investors have thought of this. Money for nothing and our yield for free. We would pick an individual dividend stock to buy before its dividend is committed (its aEURoeexaEUR date). LetaEURtms say you and I want to do better than AGD on our own (a pretty low bar). Why is AGD such a dog? Well, at its core, this strategy is a bit too aEURoebasicaEUR to actually make money.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |