Strategy To YieldBoost PPG Industries From 1.4% To 4.9% Using Options

Shareholders of PPG Industries Inc (PPG) looking to boost their income beyond the stock's 1.4% annualized dividend yield can sell the January 2019 covered call at the $120 strike and collect the premium based on the $6.00 bid, which annualizes to an additional 3.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.9% annualized rate in the scenario where the stock is not called away. Any upside above $120 would be lost if the stock rises there and is called away, but PPG shares would have to climb 8.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 13.8% return from this trading level, in addition to any dividends collected before the stock was called.