YieldBoost NDAQ From 1.8% To 11.8% Using Options

Shareholders of Nasdaq OMX Group (NDAQ) looking to boost their income beyond the stock's 1.8% annualized dividend yield can sell the June covered call at the $60 strike and collect the premium based on the $2.30 bid, which annualizes to an additional 10% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.8% annualized rate in the scenario where the stock is not called away. Any upside above $60 would be lost if the stock rises there and is called away, but NDAQ shares would have to advance 6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10.1% return from this trading level, in addition to any dividends collected before the stock was called.