YieldBoost BLL To 12.5% Using Options

Shareholders of Ball Corp (BLL) looking to boost their income beyond the stock's 0.7% annualized dividend yield can sell the November covered call at the $75 strike and collect the premium based on the $3.50 bid, which annualizes to an additional 11.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.5% annualized rate in the scenario where the stock is not called away. Any upside above $75 would be lost if the stock rises there and is called away, but BLL shares would have to climb 2.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 7.5% return from this trading level, in addition to any dividends collected before the stock was called.