Shareholders of Dover Corp (DOV) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the June 2014 covered call at the $100 strike and collect the premium based on the $3.30 bid, which annualizes to an additional 7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.6% 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 DOV shares would have to advance 4.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 8.1% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost Dover Corp To 8.6% Using Options
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