Turning to the other side of the option chain, we highlight one call contract of particular interest for the June expiration, for shareholders of Alcoa, Inc. (AA) looking to boost their income beyond the stock's 1% annualized dividend yield. Selling the covered call at the $12 strike and collecting the premium based on the 72 cents bid, annualizes to an additional 21.7% 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 22.7% annualized rate in the scenario where the stock is not called away. Any upside above $12 would be lost if the stock rises there and is called away, but AA shares would have to advance 1.9% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8% return from this trading level, in addition to any dividends collected before the stock was called.
Interesting June Stock Options For AA
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