Shareholders of ONEOK Inc. (OKE) looking to boost their income beyond the stock's 2.4% annualized dividend yield can sell the July covered call at the $67.50 strike and collect the premium based on the $3.40 bid, which annualizes to an additional 10.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.7% annualized rate in the scenario where the stock is not called away. Any upside above $67.50 would be lost if the stock rises there and is called away, but OKE shares would have to climb 0.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 5.5% return from this trading level, in addition to any dividends collected before the stock was called.
Strategy To YieldBoost ONEOK From 2.4% To 12.7% Using Options
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