YieldBoost Xylem From 0.3% To 8.8% Using Options

Shareholders of Xylem Inc. (NYSE: XYL) looking to boost their income beyond the stock's 0.3% annualized dividend yield can sell the January 2015 covered call at the $40 strike and collect the premium based on the $1.20 bid, which annualizes to an additional 8.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.8% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stoc...