YieldBoost Virtus Investment Partners From 1% To 8.6% Using Options

Shareholders of Virtus Investment Partners, Inc (VRTS) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the April 2015 covered call at the $190 strike and collect the premium based on the $7.60 bid, which annualizes to an additional 7.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.6% annualized rate in the scenario where the stock is not called away. Any upside above $190 would be lost if the stock rises there and is called away, but VRTS shares would have to climb 8.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 12.8% return from this trading level, in addition to any dividends collected before the stock was called.