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YieldBoost Norfolk Southern Corp. From 2.6% To 5.6% Using Options
2015-06-24 19:46:45| Railroads - Topix.net
Corp. looking to boost their income beyond the stock's 2.6% annualized dividend yield can sell the January 2017 covered call at the $105 strike and collect the premium based on the $4.40 bid, which annualizes to an additional 3% rate of return against the current stock price , for a total of 5.6% annualized rate in the scenario where the stock is not called away. Any upside above $105 would be lost if the stock rises there and is called away, but NSC shares would have to advance 14.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 19.2% return from this trading level, in addition to any dividends collected before the stock was called.
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Category:Transportation and Logistics