Shareholders of Crown Castle International Corp (CCI) looking to boost their income beyond the stock's 0.5% annualized dividend yield can sell the January 2016 covered call at the $80 strike and collect the premium based on the $3.70 bid, which annualizes to an additional 3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 3.5% annualized rate in the scenario where the stock is not called away. Any upside above $80 would be lost if the stock rises there and is called away, but CCI shares would have to advance 10.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 15.5% return from this trading level, in addition to any dividends collected before the stock was called.
Strategy To YieldBoost CCI From 0.5% To 3.5% Using Options
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