Shareholders of Axiall Corp (AXLL) looking to boost their income beyond the stock's 1.4% annualized dividend yield can sell the August covered call at the $55 strike and collect the premium based on the $2.10 bid, which annualizes to an additional 7.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.9% annualized rate in the scenario where the stock is not called away. Any upside above $55 would be lost if the stock rises there and is called away, but AXLL shares would have to climb 19% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 23.6% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost AXLL To 8.9% Using Options
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