Shareholders of Roper Industries, Inc (ROP) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the November covered call at the $145 strike and collect the premium based on the $4.20 bid, which annualizes to an additional 4.7% 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 $145 would be lost if the stock rises there and is called away, but ROP shares would have to climb 7.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 11% return from this trading level, in addition to any dividends collected before the stock was called.
Strategy To YieldBoost ROP From 0.6% To 5.3% Using Options
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