YieldBoost TRV From 2.2% To 4.4% Using Options

Shareholders of Travelers Companies Inc (TRV) looking to boost their income beyond the stock's 2.2% annualized dividend yield can sell the January 2019 covered call at the $140 strike and collect the premium based on the $4.30 bid, which annualizes to an additional 2.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.4% annualized rate in the scenario where the stock is not called away. Any upside above $140 would be lost if the stock rises there and is called away, but TRV shares would have to climb 8.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12.3% return from this trading level, in addition to any dividends collected before the stock was called.