How To YieldBoost ITW From 2% To 5.3% Using Options
July 23, 2014 at 12:49 PM EDT
Shareholders of Illinois Tool Works, Inc. (ITW) looking to boost their income beyond the stock's 2% annualized dividend yield can sell the January 2016 covered call at the $92.50 strike and collect the premium based on the $4.20 bid, which annualizes to an additional 3.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 5.3% annualized rate in the scenario where the stock is not called away..