Shareholders of Abercrombie & Fitch Co. (ANF) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the January 2015 covered call at the $70 strike and collect the premium based on the $4.25 bid, which annualizes to an additional 4.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.1% annualized rate in the scenario where the stock is not called away. Any upside above $70 would be lost if the stock rises there and is called away, but ANF shares would have to climb 27.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 34.9% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost Abercrombie & Fitch To 6.1%
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