Shareholders of Weyerhaeuser Co. (WY) looking to boost their income beyond the stock's 3% annualized dividend yield can sell the January 2016 covered call at the $35 strike and collect the premium based on the $1.25 bid, which annualizes to an additional 2.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 5.3% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but WY shares would have to climb 17.9% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 22.1% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost Weyerhaeuser From 3% To 5.3% Using Options
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