How To YieldBoost ONEOK From 5.2% To 21.3% Using Options

Shareholders of ONEOK Inc (OKE) looking to boost their income beyond the stock's 5.2% annualized dividend yield can sell the January 2017 covered call at the $47.50 strike and collect the premium based on the $3.90 bid, which annualizes to an additional 16.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 21.3% annualized rate in the scenario where the stock is not called away. Any upside above $47.50 would be lost if the stock rises there and is called away, but OKE shares would have to advance 0.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8.4% return from this trading level, in addition to any dividends collected before the stock was called.