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| When will Microsoft, Cisco, Oracle, Ebay and other tech stocks pay dividends?... |
July 20, 2001, Wilmington, DE -- Even though tech stocks have rebounded
lately, they don't appear headed to where they were eighteen months ago
anytime soon. But loyal shareholders stick with these stocks while the
companies sit on billions of dollars of cash. Why not pay out dividends to
compensate the faithful during this downdraft?
The reality is that Microsoft (Nasdaq:MSFT), Cisco (Nasdaq:CSCO), Oracle
(Nasdaq:ORCL), Ebay (Nasdaq:EBAY), and other technology companies may never
pay dividends. Instead, they hold onto profits to fund future acquisitions,
aggressive research programs or as rainy day reserves.
But what about investors who don't want to sell their stock but would like to
raise some cash? It's probably the wrong time to sell these stocks but the
cash would be nice.
"I'm always amazed at how much money people, quite literally, leave on the
table," states PowerOptions President, Ernie Zerenner. "Hundreds of
shares of stock, maybe thousands, sit in investors' portfolios and most of
those shares could be putting stacks of cash in their owners' pockets."
Now it's easier than ever to squeeze dividend-like income from your
non-dividend paying holdings.
Here's how it works…
Most stocks offer publicly traded options. You make these transactions with
your broker, similar to buying and selling stocks.
A call option gives another investor the right to buy shares from you at a
price you set anytime before a certain date. You collect a premium by
selling the call and you get the premium, in cash, on the day you sell the
option. Just like a dividend.
One strategy is to sell "at-the-money" or "out-of-the-money" calls on your
stocks (Covered Calls). This means the strike (expiration) price of the
option is at or above the current stock price. If you set the strike price
so high the stock doesn't reach that price, you keep your stock.
Widely held, heavily traded stocks like Microsoft, Cisco, Oracle, and Ebay
are perfect for this strategy. Option premiums fluctuate but the list below
illustrates returns you might expect over the period shown for every thousand
shares of your stock.
* MSFT - $2,100 for a 38 day out-of-the-money option.
* CSCO - $1,300 for a 38 days out-of-the-money option.
* ORCL - $1,250 for a 73 day out-of-the-money option.
* EBAY - $6,100 for a 38 day at-the-money option.
You can sell options each month, up to 12 times a year, after they expire.
The returns above are for short time periods. It's not unusual to see return
rates of 12% over sixty days, which works out to an astounding 72% annual
return just on stocks you already have in your portfolio. Of course
brokerage commissions and taxes will affect your actual returns.
And there's a tool to help you do it…
PowerOptions offers a suite of internet tools accessed through your
web browser. With this investment data service you type in a stock symbol
and a table clearly lists the premiums you can expect for all the available
options along with the return rate over the period and annualized. "We also
provide an indicator for the percent probability that the stock price will
reach each strike price," says Zerenner. "This gives you a quick feel for
which option you may want to sell. "
… and it's guaranteed
Each PowerOptions subscription includes the following guarantee:
If during any month you do not make at least five times your subscription fee
on your option investments, your next month's subscription fee will be free.
See http://www.poweropt.com/ for details.
About PowerOptions
The Best Way To Find, Compare, Analyze, and Make Money On Option Investments.
Founded in 1997, PowerOptions is the only Internet-based data service
that uses SmartSearchXL, patented technology that analyzes all 2,500+
optionable stocks and 100,000+ options to find the highest return investment
opportunities. PowerOptions offers a 14-day free trial, an online Quick
Startup Guide and toll-free support. See http://www.poweropt.com/ for more
information.
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