Shareholders of Simon Property Group (SPG) looking to boost their income beyond the stock's 3.1% annualized dividend yield can sell the January 2016 covered call at the $165 strike and collect the premium based on the $12.35 bid, which annualizes to an additional 4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.1% annualized rate in the scenario where the stock is not called away. Any upside above $165 would be lost if the stock rises there and is called away, but SPG shares would have to advance 2.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 10% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost Simon Property Group To 7.1% Using Options
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