YieldBoost Citizens Financial Group To 14.9% Using Options

Shareholders of Citizens Financial Group Inc (CFG) looking to boost their income beyond the stock's 4% annualized dividend yield can sell the July covered call at the $40 strike and collect the premium based on the $1.90 bid, which annualizes to an additional 10.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 14.9% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but CFG shares would have to advance 1.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 6.7% return from this trading level, in addition to any dividends collected before the stock was called.
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