Strategy To YieldBoost AIZ From 1.9% To 13.7% Using Options
February 04, 2020 at 14:27 PM EST
Shareholders of Assurant Inc (AIZ) looking to boost their income beyond the stock's 1.9% annualized dividend yield can sell the June covered call at the $135 strike and collect the premium based on the $5.90 bid, which annualizes to an additional 11.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.7% annualized rate in the scenario where the stock is not called away. Any upside above $135 would be lost if the stock rises there and is called away, but AIZ shares would have to climb 0.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 4.9% return from this trading level, in addition to any dividends collected before the stock was called.
