YieldBoost Visa To 4% Using Options

Shareholders of Visa Inc (V) looking to boost their income beyond the stock's 0.8% annualized dividend yield can sell the January 2017 covered call at the $300 strike and collect the premium based on the $16.65 bid, which annualizes to an additional 3.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4% annualized rate in the scenario where the stock is not called away. Any upside above $300 would be lost if the stock rises there and is called away, but V shares would have to advance 17.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 24.2% return from this trading level, in addition to any dividends collected before the stock was called.