Shareholders of Cummins, Inc. (NYSE: CMI) looking to boost their income beyond the stock's 1.7% annualized dividend yield can sell the January 2015 covered call at the $150 strike and collect the premium based on the $7.50 bid, which annualizes to an additional 3.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 5.6% annualized rate in the scenario where the stock is not called away. Any upside above $150 would be lost if the...
Shareholders of Cummins, Inc. (NYSE: CMI) looking to boost their income beyond the stock's 1.7% annualized dividend yield can sell the January 2015 covered call at the $150 strike and collect the premium based on the $7.50 bid, which annualizes to an additional 3.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 5.6% annualized rate in the scenario where the stock is not called away. Any upside above $150 would be lost if the...
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