Shareholders of Vornado Realty Trust (VNO) looking to boost their income beyond the stock's 3.1% annualized dividend yield can sell the September covered call at the $100 strike and collect the premium based on the $2.30 bid, which annualizes to an additional 3.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.8% 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 VNO shares would have to climb 6.9% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.4% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost VNO To 6.8% Using Options
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