How To YieldBoost Nielsen Holdings From 2.2% To 7.1% Using Options

Shareholders of Nielsen Holdings PLC (NLSN) looking to boost their income beyond the stock's 2.2% annualized dividend yield can sell the November covered call at the $55 strike and collect the premium based on the $1.40 bid, which annualizes to an additional 4.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.1% annualized rate in the scenario where the stock is not called away. Any upside above $55 would be lost if the stock rises there and is called away, but NLSN shares would have to advance 7.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 10.2% return from this trading level, in addition to any dividends collected before the stock was called.