Turning to the other side of the option chain, we highlight one call contract of particular interest for the September expiration, for shareholders of Alcoa, Inc. (AA) looking to boost their income beyond the stock's 0.9% annualized dividend yield. Selling the covered call at the $13 strike and collecting the premium based on the 88 cents bid, annualizes to an additional 15.8% 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 16.8% annualized rate in the scenario where the stock is not called away. Any upside above $13 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 happen, meaning that in the scenario where the stock is called, the shareholder has earned a 8.8% return from this trading level, in addition to any dividends collected before the stock was called.
Interesting September Stock Options For AA
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