Turning to the other side of the option chain, we highlight one call contract of particular interest for the October 2014 expiration, for shareholders of Microsoft Corporation (MSFT) looking to boost their income beyond the stock's 3.1% annualized dividend yield. Selling the covered call at the $42 strike and collecting the premium based on the $1.04 bid, annualizes to an additional 3.5% rate of return against the current stock price (this is what we at Stock Options Channel refer to as the YieldBoost), for a total of 6.5% annualized rate in the scenario where the stock is not called away. Any upside above $42 would be lost if the stock rises there and is called away, but MSFT shares would have to climb 14.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 17.4% return from this trading level, in addition to any dividends collected before the stock was called.
One Put, One Call Option To Know About for Microsoft
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