Strategy To YieldBoost Axiall Corp From 1.8% To 17.3% Using Options

Shareholders of Axiall Corp (AXLL) looking to boost their income beyond the stock's 1.8% annualized dividend yield can sell the February 2015 covered call at the $37.50 strike and collect the premium based on the $2.05 bid, which annualizes to an additional 15.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 17.3% annualized rate in the scenario where the stock is not called away. Any upside above $37.50 would be lost if the stock rises there and is called away, but AXLL shares would have to advance 4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9.7% return from this trading level, in addition to any dividends collected before the stock was called.