How To YieldBoost DOV To 13.6% Using Options

Shareholders of Dover Corp (DOV) looking to boost their income beyond the stock's 2.1% annualized dividend yield can sell the December covered call at the $85 strike and collect the premium based on the $3.80 bid, which annualizes to an additional 11.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.6% annualized rate in the scenario where the stock is not called away. Any upside above $85 would be lost if the stock rises there and is called away, but DOV shares would have to climb 0.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 5.4% return from this trading level, in addition to any dividends collected before the stock was called.
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