Although we covered a more in-depth analysis of (BTI) British American Tobacco in this article, today, I realized a play that can be very beneficial within the next few days.
BTI goes ex-dividend on 22 December 2021. That means that everyone who buys shares on or before 21 December 2021 will receive a dividend payout.
The idea is simple, but you have to afford to buy 100 shares. At the current price of $37.30 on 20 December 2021, it will cost $3,730. Before you ask, Yes, you can still buy shares of BTI if you don’t have the whole amount needed; you won’t be able to complete the entire strategy, though. But you can always learn it for later. Buying shares will only give you the dividend.
Let’s try to catch a dividend here.
I bought 100 at $37.26 for a total of $3,726. Therefore, BTI will pay a dividend of $0.74, bringing in $74. For those of you who are newer, you multiply the number of shares (100) by the amount of the dividend paid ($0.74). That’s how you calculate how much you will receive.
On the 22nd, I will sell a call option, the $35 Call expiring on 21 January 2022, to be exact. It is currently trading for $2.30. If BTI keeps increasing in value, it could sell for that or more. To keep it simple, let’s use the current price.
As long as BTI remains above $35 by the expiration date of 21 Jan 22, my shares will be called away at a standard price of $35 per share.
Let’s do the math:
100 shares at $35 = $3,500
Credit for selling the call is $2.30 * 100 shares = $230
The dividend, as previously established, is $74
Add it all up, and you get $3,804. So my total investment was $3,726, which gives me a $78 profit in exactly 31 days for a little over 5 minutes of work. That is an annualized gain of 24.87% for sitting on my hands.
Are you receiving a 24% profit anywhere else? If not, this is an opportunity you can try with dividend-paying stocks.
Now, begin your Road to Wealth!
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