Shareholders of Tupperware Brands (TUP) looking to boost their income beyond the stock's 2.7% annualized dividend yield can sell the February covered call at the $95 strike and collect the premium based on the $2.20 bid, which annualizes to an additional 17.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20% annualized rate in the scenario where the stock is not called away. Any upside above $95 would be lost if the stock rises there and is called away, but TUP 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 5% return from this trading level, in addition to any dividends collected before the stock was called.
Strategy To YieldBoost TUP To 20% Using Options
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