Shareholders of SPX Corp. (SPW) looking to boost their income beyond the stock's 1.1% annualized dividend yield can sell the June 2014 covered call at the $100 strike and collect the premium based on the $4.20 bid, which annualizes to an additional 8.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.3% annualized rate in the scenario where the stock is not called away. Any upside above $100 would be lost if the stock rises there and is called away, but SPW shares would have to climb 5.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost SPW From 1.1% To 9.3% Using Options
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