How To YieldBoost PPL Corp From 4.3% To 8.3% Using Options

Shareholders of PPL Corp (PPL) looking to boost their income beyond the stock's 4.3% annualized dividend yield can sell the January 2016 covered call at the $36 strike and collect the premium based on the $1.00 bid, which annualizes to an additional 4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.3% annualized rate in the scenario where the stock is not called away. Any upside above $36 would be lost if the stock rises there and is called away, but PPL shares would have to climb 4.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 7.4% return from this trading level, in addition to any dividends collected before the stock was called.