YieldBoost PPG Industries To 11.2% Using Options

Shareholders of PPG Industries Inc (PPG) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the February 2017 covered call at the $105 strike and collect the premium based on the $4.00 bid, which annualizes to an additional 9.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.2% annualized rate in the scenario where the stock is not called away. Any upside above $105 would be lost if the stock rises there and is called away, but PPG shares would have to advance 1.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 5.6% return from this trading level, in addition to any dividends collected before the stock was called.