How To YieldBoost CF Industries Holdings From 4.8% To 13.2% Using Options

Shareholders of CF Industries Holdings Inc (CF) looking to boost their income beyond the stock's 4.8% annualized dividend yield can sell the May 2017 covered call at the $30 strike and collect the premium based on the $1.29 bid, which annualizes to an additional 8.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.2% annualized rate in the scenario where the stock is not called away. Any upside above $30 would be lost if the stock rises there and is called away, but CF shares would have to climb 21.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 26.4% return from this trading level, in addition to any dividends collected before the stock was called.