Strategy To YieldBoost TransUnion To 9.7% Using Options

Shareholders of TransUnion (TRU) looking to boost their income beyond the stock's 0.5% annualized dividend yield can sell the December covered call at the $90 strike and collect the premium based on the $4.50 bid, which annualizes to an additional 9.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.7% annualized rate in the scenario where the stock is not called away. Any upside above $90 would be lost if the stock rises there and is called away, but TRU shares would have to advance 14.2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 19.9% return from this trading level, in addition to any dividends collected before the stock was called.