Shareholders of NextEra Energy Inc (NEE) looking to boost their income beyond the stock's 3% annualized dividend yield can sell the September covered call at the $100 strike and collect the premium based on the $2.35 bid, which annualizes to an additional 5.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.9% annualized rate in the scenario where the stock is not called away. Any upside above $100 would be lost if the stock rises there and is called away, but NEE shares would have to advance 3.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 6.2% return from this trading level, in addition to any dividends collected before the stock was called.
Strategy To YieldBoost NextEra Energy From 3% To 8.9% Using Options
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