YieldBoost CSX Corp To 19.3% Using Options

Shareholders of CSX Corp (CSX) looking to boost their income beyond the stock's 2.9% annualized dividend yield can sell the November covered call at the $25 strike and collect the premium based on the $1.60 bid, which annualizes to an additional 16.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 19.3% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but CSX shares would have to advance 0.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 7.1% return from this trading level, in addition to any dividends collected before the stock was called.