Time to catch a SPY dividend? 19-June-2009 ex-dividend date

It is almost ex-dividend time again for SPY -- according to the CBOE the ex-dividend date is the 3rd Friday in December, March, June, and September. So it is June 19th this year (June options expire on the 20th). My guess is a dividend of around $0.50 per share -- so with SPY running around 94, that is around a 0.5% payout. Small potatoes, but you only need to be invested for 1 day (buy on the 18th or before). Of course SPY will likely open down around the dividend amount on 19th, so it is a wash at the straight buy-the-stock-collect-the-dividend level.

Approach A: I have successfully played this by selling deep in the money calls on SPY with a premium equal or greater than the dividend amount. The calls are usually exercised and you have your money as premium, rather than dividend. However this month, I have been very nervous about a market correction (to make it a "W" instead of a "V" shaped bear market bottom) so that approach is not very attractive.

Approach B: Another path is to sell in the money (ITM) calls much closer to the expiration date, again with premium close to the dividend payout and hope they expire in the money and you get assigned. If they don't expire in the money you run the risk of the market dropping the next Monday and wiping out all your crafty plans. By the way, you can't sell your SPY shares in the after-market on that Friday even if the calls are out of the money--had my wrist slapped on that one. The calls don't expire until Saturday and selling the underlying on Friday creates a naked position you probably aren't authorized for. Closing out the position close to market end might be a pretty cheap solution, or perhaps buy OTM calls to create a cheap bull spread and then sell the SPY. Commissions costs are definitely a factor here.

I've looked at trying to short the SPY wanna-be IVV and the short and ultrashort funds but the pros are way ahead of us on this one--there is no way to beat them this way.

I'll probably do approach "B" this year, but I might pass because of the downside risks.