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Strategy To YieldBoost FedEx To 3.9% Using Options
2014-09-12 02:12:15| Air Courier - Topix.net
Corp looking to boost their income beyond the stock's 0.5% annualized dividend yield can sell the January 2016 covered call at the $175 strike and collect the premium based on the $6.80 bid, which annualizes to an additional 3.3% rate of return against the current stock price , for a total of 3.9% annualized rate in the scenario where the stock is not called away. Any upside above $175 would be lost if the stock rises there and is called away, but FDX shares would have to advance 15.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 20.2% return from this trading level, in addition to any dividends collected before the stock was called.
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Category:Transportation and Logistics