Turning to the other side of the option chain, we highlight one call contract of particular interest for the May expiration, for shareholders of Hewlett-Packard Co (HPQ) looking to boost their income beyond the stock's 2% annualized dividend yield. Selling the covered call at the $30 strike and collecting the premium based on the $1.57 bid, annualizes to an additional 18% rate of return against the current stock price (this is what we at Stock Options Channel refer to as the YieldBoost), for a total of 20% annualized rate in the scenario where the stock is not called away. Any upside above $30 would be lost if the stock rises there and is called away, but HPQ shares would have to climb 3.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8.9% return from this trading level, in addition to any dividends collected before the stock was called.
One Put, One Call Option To Know About for Hewlett-Packard
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts