Strategy To YieldBoost Baxter International To 8.2% Using Options

Shareholders of Baxter International Inc (BAX) looking to boost their income beyond the stock's 3.1% annualized dividend yield can sell the January 2026 covered call at the $42.50 strike and collect the premium based on the $2.70 bid, which annualizes to an additional 5.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.2% annualized rate in the scenario where the stock is not called away. Any upside above $42.50 would be lost if the stock rises there and is called away, but BAX shares would have to advance 11.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 18.9% return from this trading level, in addition to any dividends collected before the stock was called.