Shareholders of Ryder System, Inc. (R) looking to boost their income beyond the stock's 2.3% annualized dividend yield can sell the February 2014 covered call at the $60 strike and collect the premium based on the $3.50 bid, which annualizes to an additional 14.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 16.6% annualized rate in the scenario where the stock is not called away. Any upside above $60 would be lost if the stock rises there and is called away, but R shares would have to climb 1.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 7.2% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost Ryder System To 16.6%
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