Strategy To YieldBoost CTVA To 6.8% Using Options
March 26, 2024 at 12:06 PM EDT
Shareholders of Corteva Inc (CTVA) looking to boost their income beyond the stock's 1.1% annualized dividend yield can sell the January 2025 covered call at the $65 strike and collect the premium based on the $2.55 bid, which annualizes to an additional 5.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.8% annualized rate in the scenario where the stock is not called away. Any upside above $65 would be lost if the stock rises there and is called away, but CTVA shares would have to climb 16.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 20.8% return from this trading level, in addition to any dividends collected before the stock was called.