YieldBoost Boston Properties From 2.4% To 11.9% Using Options
November 20, 2017 at 11:37 AM EST
Shareholders of Boston Properties Inc (BXP) looking to boost their income beyond the stock's 2.4% annualized dividend yield can sell the April 2018 covered call at the $125 strike and collect the premium based on the $4.90 bid, which annualizes to an additional 9.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.9% annualized rate in the scenario where the stock is not called away. Any upside above $125 would be lost if the stock rises there and is called away, but BXP shares would have to advance 0.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 4.3% return from this trading level, in addition to any dividends collected before the stock was called.