YieldBoost IBM To 4% Using Options
April 17, 2014 at 11:35 AM EDT
Shareholders of International Business Machines Corp. (IBM) looking to boost their income beyond the stock's 2% annualized dividend yield can sell the January 2016 covered call at the $220 strike and collect the premium based on the $6.70 bid, which annualizes to an additional 2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4% annualized rate in the scenario where the stock is not called away..