YieldBoost EFX From 1.2% To 12.6% Using Options
December 01, 2016 at 11:54 AM EST
Shareholders of Equifax Inc (EFX) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the April 2017 covered call at the $115 strike and collect the premium based on the $5.00 bid, which annualizes to an additional 11.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.6% annualized rate in the scenario where the stock is not called away. Any upside above $115 would be lost if the stock rises there and is called away, but EFX shares would have to climb 1.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 5.9% return from this trading level, in addition to any dividends collected before the stock was called.