Shareholders of Newell Rubbermaid, Inc. (NWL) looking to boost their income beyond the stock's 1.9% annualized dividend yield can sell the June 2014 covered call at the $33 strike and collect the premium based on the $1.25 bid, which annualizes to an additional 7.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.8% annualized rate in the scenario where the stock is not called away. Any upside above $33 would be lost if the stock rises there and is called away, but NWL shares would have to advance 2.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 6.6% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost Newell Rubbermaid From 1.9% To 9.8% Using Options
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