The Synthetic Dividend Option To Generate Profits
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Many companies regularly distribute a portion of their profits in the form of a dividend to attract investors and incentivize them to remain long-term shareholders. But most companies, ETFs, and commodities don’t pay a dividend at all. When there’s no dividend, the only opportunity for income or a profit comes from a capital gain (or loss) from selling the position.
Wouldn’t it be nice to get regular payouts from “no dividend” investments? As a dividend, these payouts could be used for income. Or, if left invested, our cost-basis could be further reduced with every payout.
While the strategy presented here can work on any stock or ETF that has options, it works best with relatively lower-priced products under about $25.
The post The Synthetic Dividend Option To Generate Profits originally appeared at TheTechnicalTraders.com.
Category: Covered Call Writing
