Turning to the other side of the option chain, we highlight one call contract of particular interest for the July expiration, for shareholders of Caterpillar Inc. (CAT) looking to boost their income beyond the stock's 2.3% annualized dividend yield. Selling the covered call at the $104 strike and collecting the premium based on the $1.79 bid, annualizes to an additional 16.2% 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 18.5% annualized rate in the scenario where the stock is not called away. Any upside above $104 would be lost if the stock rises there and is called away, but CAT shares would have to advance 0.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 2.4% return from this trading level, in addition to any dividends collected before the stock was called.
Interesting July Stock Options For Caterpillar
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