Strategy To YieldBoost Roper Industries From 0.6% To 9.3% Using Options

Shareholders of Roper Industries, Inc (ROP) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the November covered call at the $170 strike and collect the premium based on the $8.50 bid, which annualizes to an additional 8.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.3% annualized rate in the scenario where the stock is not called away. Any upside above $170 would be lost if the stock rises there and is called away, but ROP shares would have to climb 0.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 5.8% return from this trading level, in addition to any dividends collected before the stock was called.