We are talking about a huge dividend. This occurs every now and then in the stock market. Why is this happening? Well this company is a dog and they are simply giving back their money to the shareholders since the company management does not have many idea about how to earn more money. But let us go back to business: if you buy the stock on Thursday, hold it on Friday morning and resell it just after you will get paid roughly 10% of your invested money.
The drawback is that the stock price will most likely drop on the ex-date (coming friday), which is why you should use options to lock your stock price at the same time you buy the stock. How to do that? Simple, use covered calls! Which means that you sell CALL options with a strike price lower than the current trading price in order to lock in the future price. And as a nice side effect, you will pocket in an option premium for doing this.
Practically your trade to enter the position should look like that:
What can happen?
- you will start losing money if the goes completely collapses in the coming days. The pain level is when the share drops below the level
bought share price - option premium received - dividend received ? $5.88 - $0.75 -$0.5921 = $4.5379
this is possible but highly unlikely since we are talking about a 30% decrease over only 2 days from today's level of $5.88...
- but otherwise you are very likely to make money, and the most plausible scenario is that you will sell the stock for the price that you have locked it into with call ($5.00).
Gain per share = sell price + option premium received + dividend received - bought share price
= $5.00 + $0.75 + $0.5921 - $5.88
So a gain of $0.4621 per share while the share price is only $5.88, and in just two days...
To be fairly honest I do not know where the stock price will land, but the odds are for making this covered call move as we are talking about a nice return...