YieldBoost IVZ From 2.6% To 11.1% Using Options

Shareholders of Invesco Ltd (IVZ) looking to boost their income beyond the stock's 2.6% annualized dividend yield can sell the January 2015 covered call at the $39 strike and collect the premium based on the $1.60 bid, which annualizes to an additional 8.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.1% annualized rate in the scenario where the stock is not called away. Any upside above $39 would be lost if the stock rises there and is called away, but IVZ shares would have to advance 0.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 5% return from this trading level, in addition to any dividends collected before the stock was called.