As expected, Costco (COST) has settled into its ex-dividend price of $98, after its $7 dividend. It’s been at this level for a couple of days. In the medium term, I expect COST to recover this drop as it’s a very strong stock. So here’s the Trade idea – Long Bull Call Trade on COST. But here’s the twist – this is an In The Money Bull Call trade
Linkedin has made a nice move upwards. Its up over 20% in the last month, and is hitting the upper Bollinger band today. Both factors combined produce this Trade idea – Linkedin short strangle
We put the Priceline Bear Call Trade (PCLN) on Dec 3. At that time, PCLN had stuck its head above the upper Bollinger Band. Just because a stock goes above or below the 2-Standard Deviation bands does not automatically trigger a trade. However, we noted that Priceline had already made an impressive move up of 25%. When these two factors combined, it provided a strong entry signal. This was going to be a “mean reversion” play.
As we all know, several companies are rushing to issue dividends this month to avoid (much) higher dividend taxes if there is no resolution to the fiscal cliff negotiations post Jan 1, 2013. This post is about using Option trades for dividend plays and there are many big companies in this pack. Walmart, Costco, Las Vegas Sands are all issuing fairly large dividends. The Chicago Tribune has a complete list here –
Markets are marching upwards in the hope of a fiscal cliff resolution. Priceline (PCLN) has moved up nicely from a level of 550 to 673 in the past month. That’s a 25% move. The stock is currently above the upper Bollinger band of 2 Standard deviations, so I’m expecting a pullback (see Figure below). Here is a Priceline trade (Bear Call) that I’m putting on right now.
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