Shareholders of Visa (V) looking to boost their income beyond the stock's 0.7% annualized dividend yield can sell the January 2016 covered call at the $260 strike and collect the premium based on the $7.85 bid, which annualizes to an additional 2.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 3.1% annualized rate in the scenario where the stock is not called away. Any upside above $260 would be lost if the stock rises there and is called away, but Visa shares would have to advance 20.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 24.6% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost Visa From 0.7% To 3.1% Using Options
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