CAT - New Position

A new dividend position was established today on Caterpillar (CAT). The following is the trade information, including IB commissions:

25-Jun-09 - Initial Stock Position - BTO 100 CAT @ 34.28 -
25-Jun-09 - Initial Call Option - STO 1 Jul09 34.00 Call @ 1.46 -
20-Aug-09 - Dividend Received - DIV 100 Dividend @ 0.42 -

Caterpillar is a fundamentally solid wide moat company, with 9 out of 10 years of positive cash flow, and 15 consecutive years of dividend increases. They declared a quarterly dividend on 6/10 of $0.42, with ex-dividend date on 7/16, payable on 8/20.

I analyzed doing either a covered call (CC) or a cash secured put (CSP) and decided to do the CC trade to capture the dividend, since it had a slightly better profit than the CSP.

Summary without the dividend if called early the day before Ex-Dividend date:

Stock Investment: $3,428.00
Income Generated: $146.00
Percent Income Generated: 4.26%
Annualized Income Generated: 77.73%
Net Profit If Called: $118.00
Percent Return If Called: 3.44%
Annualized Return If Called: 62.82%
Days Held to Ex-Dividend Date: 20 days

Summary with the dividend if called at option expiration:

Stock Investment: $3,428.00
Income Generated: $188.00
Percent Income Generated: 5.48%
Annualized Income Generated: 90.99%
Net Profit If Called: $160.00
Percent Return If Called: 4.67%
Annualized Return If Called: 77.44%
Days Held to Ex-Dividend Date: 22 days

Dividend Information:

Ex-Dividend Date: 07/16/09
Dividend Pay Date: 08/20/09
Dividend Rate: $1.68 ($0.42/per quarter)
Dividend Yield on Cost: 4.90%