One (pretty big) oversight that I just realized: ZIM dividends are taxed by Israel (at a rate of 25%) before they’re distributed to investors. The U.S. and Israel have a tax treaty which covers this—you can see the detail in Article 12 here.
So, the immediate 25% tax isn’t awesome—it reduces the $17 payout to $12.75, and possible ROI from 34% to 25.5%—but those are still incredible numbers at least.
With a regular (i.e. taxable) account, you’ll be able to claim a foreign tax credit for that 25% when it comes time to pay U.S. taxes next year. But if you’re receiving the dividends in a tax-advantaged account (IRA, 401k, etc), you don’t have a way to claw any of that 25% back.
Anyhow, it’s a bit of a bummer and the tax situation might be more than some folks want to deal with—but if all of the mechanics of the trade actually check out and there aren’t any big downsides that we haven’t already thought of, it still seems like easy money.
I’m in, just scalping shares though. Using this chart to learn more about TA, going to sit out of options due to my risk tolerance . Good luck everyone!
Well my stop lost hit and I’m out . my entry’s and averaging down saved me I was setting to take my cost basis out when it spiked to 84 then the drop began . As I kept adjusting it kept dropping.
just entered before market close. 100 shares at 84.5 and sold 1 3/25 45c for the corresponding amount. just double-checking, people are seeing the ex-dividend date as 3/23 right? so as long as i don’t get assigned before then, i should collect the dividend then
This is the only thing that is preventing me from making this trade of buying stocks and selling calls - still not clear on what the chances of assignment are.
If the seller is a sophisticated actor and they are reasonably confident that prices will fall after ex-dividend date, then it should be pretty high. So it hinges on whether they think price will fall after dividend date.
If you were assigned before ex dividend date wouldn’t you be forced to sell shares for $5K, and then the contract goes away and you therefore keep the entirety of the premium right? And in this case, premium should be equal to the difference between your share purchase price and the strike
Yes, that’s how I’m seeing it. Early assignment just results in a wash—net $0. If you’re forced to sell the shares, it would be at the strike price of the call ($5,000), and you keep the entire premium.
Idk how the timing of exercising works, like if you find out instantaneously on 2:23 when the other dude exercises, or if you find out EOD. But assuming you get enough advance time, you could just open up another position if early assignment happens lol
