Using Options To Capture Dividends From H&R Block

| About: H&R Block (HRB)

H&R Block, Inc. (NYSE:HRB) Yield: 4.3%
Dividend Amount: $0.15
Ex-Dividend Date: June 08, 2011
Beta: 0.60

In combination with my buying the stock and after checking company updates, offer to sell the September $14.00 strike call for $0.16 over the intrinsic value. The option may get exercised early for a gain. If not, after qualifying for the dividend, I will look to close out the covered option with a gain of about $0.01.

In the last month, the stock has decreased in price -6.68 %, with a one year change of 3.64%.
Comparing to the S&P 500 price changes, the price performances are 2.48% vs. the S&P 500 from a month ago, and year to date difference is 25.26% vs. the S&P 500 price change.

Remember, you must buy a stock at least three business days before the record date (at least one business day before the ex-dividend date) to qualify for a dividend.

My last step (completed before making a trade on the same day) is to check company announcements, and news sources for possible events that may cause the stock price to move. This is especially important during earnings season.

I research the different call options and calculate the expected probabilities based on Beta, Bid, Offer, Volume traded the current day, open interest, and time value / implied volatility. The Options offer some level of protection from down moves in the stock, and provide revenue to cover the times that the options do not fully cover down moves in the stock. Income is not needed from the option Premiums, so a break even from premiums received/stock losses ratio is a win.

I use a proprietary blend of technical analysis, financial crowd behavior, and fundamentals in my short-term trades, and while not totally the same in longer swing trades to investments, the concepts used are similar. Nothing in the article should be considered investment advice, but you may want to use this article as a starting point of your own research with your financial planner. I use Seeking Alpha, Edgar Online, and Yahoo Finance for most of my data.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in HRB over the next 72 hours.