Shareholders of Newmont Mining (NEM) looking to boost their income beyond the stock's 2.5% annualized dividend yield can sell the January 2016 covered call at the $32 strike and collect the premium based on the $2.02 bid, which annualizes to an additional 4.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.9% annualized rate in the scenario where the stock is not called away. Any upside above $32 would be lost if the stock rises there and is called away, but NEM shares would have to climb 31.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 39.4% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost Newmont Mining To 6.9% Using Options
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