YieldBoost PNC Financial Services From 2.3% To 4.8% Using Options

Shareholders of PNC Financial Services Group (PNC) looking to boost their income beyond the stock's 2.3% annualized dividend yield can sell the January 2016 covered call at the $92.50 strike and collect the premium based on the $3.15 bid, which annualizes to an additional 2.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.8% annualized rate in the scenario where the stock is not called away. Any upside above $92.50 would be lost if the stock rises there and is called away, but PNC shares would have to advance 9.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 13.7% return from this trading level, in addition to any dividends collected before the stock was called.