Daily Options Report

Have dividend plays gone off the rails?

Yesterday over 1 million VZ Jan. 30 Calls traded to capture the .45 dividend. A total of 338 went unnassigned. In T, over 1.3 million Jan. 25 calls and a whopping 761 went unnassigned.

If you're doing the math at home that's.....not good odds. Commissions are capped/pre-arranged et. al., so expenses are low, but there are myriad small costs associated with the plays that add up considering the chances of success are tiny.

I'll have more on how dividend plays work out tomorrow, but the short story is traders cross virtually risk-free spreads that gets them short a strikes with decent open interest and hope someone forgets to exercise his calls for the dividend. For whatever reason, more and more dividend spreads seem to go up these days and fewer and fewer calls go unassigned.