Shareholders of DeVry Education Group (DV) looking to boost their income beyond the stock's 0.9% annualized dividend yield can sell the February covered call at the $40 strike and collect the premium based on the 95 cents bid, which annualizes to an additional 35.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 36.6% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but DV shares would have to climb 7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9.6% return from this trading level, in addition to any dividends collected before the stock was called.
Strategy To YieldBoost DeVry Education Group To 36.6% Using Options
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