#63 Covered Call Sell: WPG SEP 20'19 2.5 @0.9 (Dividend Capture)

Updated: 23 December, 2019 seen 62

On August 23rd, 2019, I sold the following covered call -  WPG SEP 20'19 2.5 @0.9. I entered this trade for a speculative reason and to learn a new technique - capturing a dividend

On dividend.com I noticed that WPG has kept a dividend at $0.25 per share, and is going ex-dividend on August 30

Upcoming dividend date WPG

Upcoming dividend date WPG

As we have been holding WPG in our children investment portfolio, I keep an eye on developments with this stock, In short the stock has lost in value about 50% since we first bought it at the end of 2018, but has kept a stable dividend, despite the dividend yield is already close to 30%

Latest Stock Buy For Child Investment Portfolio: WPG

I decided to perform a little experiment and see, could I capture dividend using call options. 

With the stock price at $3.4 per share and In-the-money strike price at $2.5, I needed to get at least $0.9 per share in premium to break even (not counting in commissions and dividend). I tried to get at least a dollar or $0.95 but at the end got $0.9 per share.

Got for this trade a premium of $90, but I will be obligated to sell 100 shares of WPG if the strike price will be above  $2.5 per share by Sep 20, 2019. Now as WPG is currently trading around $3.30 - $3.40, there is a more than a huge chance that I will have to sell at $2.5.

But as I have got premium $90 or $0.9 per share, I will be still break even.

After I sold this naked call, I immediately bought 100 shares of WPG, again I tried to lower the share price by setting limit price $3.30, $3.35 but at the end bought at $3.4

Now the rest is the only dividend, in case I will own WPG on the ex-dividend date I can expect to get a small $25 dividend (before taxes) in September

For a little $340 investment to buy this share, that would give us a 7.35% ROI in less than 30 days. Now, as we got a $90 premium, our real invested dollar value is just $250. 

$25 from $250 is a 10% yield in less than 30 days

I'm not sure is it even sustainable to make such returns for 12 months in a row but if it is, then it would give a 120% ROI in one year. Unbelievable.

The Bottom Line

Update: my shares were called away a day before the ex-div date, I will not earn the free dividend, but that was a great learning experience.

I might return to capturing the dividend for WPG in December. Not sure yet, but could try to sell 10 covered calls. 

With the price $3.4 per share 10 lots of covered call would cost $3,400, a $0.25 dividend per share. And here you go a potential way to capture $250. 


Hi! My name is Reinis Fischer (38), a proud dad and devoted husband. CEO and Founder of Terramatris crypto hedge fund, drone enthusiast, world traveler, photographer, and passionate lover of Georgian cuisine (vegetarian).

An ex-pat living in Georgia since 2011, I trade stocks, take photographs, work out at the gym, and many more. Here I write about travel, finance, and other things that might interest me.