Shareholders of Edison International (EIX) looking to boost their income beyond the stock's 2.8% annualized dividend yield can sell the July covered call at the $52.50 strike and collect the premium based on the $1.25 bid, which annualizes to an additional 5.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.7% annualized rate in the scenario where the stock is not called away. Any upside above $52.50 would be lost if the stock rises there and is called away, but EIX shares would have to advance 2.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 4.8% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost EIX To 8.7% Using Options
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