Shareholders of Microsoft Corporation (MSFT) looking to boost their income beyond the stock's 2.9% annualized dividend yield can sell the January 2016 covered call at the $50 strike and collect the premium based on the $1.00 bid, which annualizes to an additional 1.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.3% annualized rate in the scenario where the stock is not called away. Any upside above $50 would be lost if the stock rises there and is called away, but MSFT shares would have to advance 26.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 29.4% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost Microsoft Corporation From 2.9% To 4.3% Using Options
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