YieldBoost ABT To 4.7% Using Options

Shareholders of Abbott Laboratories (ABT) looking to boost their income beyond the stock's 2.4% annualized dividend yield can sell the January 2018 covered call at the $50 strike and collect the premium based on the $1.45 bid, which annualizes to an additional 2.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.7% annualized rate in the scenario where the stock is not called away. Any upside above $50 would be lost if the stock rises there and is called away, but ABT shares would have to advance 16.9% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 20.3% return from this trading level, in addition to any dividends collected before the stock was called.