Shareholders of Winthrop Realty Trust (FUR) looking to boost their income beyond the stock's 5.2% annualized dividend yield can sell the April 2014 covered call at the $12.50 strike and collect the premium based on the 15 cents bid, which annualizes to an additional 1.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.1% annualized rate in the scenario where the stock is not called away. Any upside above $12.50 would be lost if the stock rises there and is called away, but FUR shares would have to climb 0.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 2% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost Winthrop Realty Trust From 5.2% To 7.1%
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