YieldBoost Citizens Financial Group From 3.6% To 12.6% Using Options
June 18, 2019 at 13:02 PM EDT
Shareholders of Citizens Financial Group Inc (CFG) looking to boost their income beyond the stock's 3.6% annualized dividend yield can sell the October covered call at the $37.50 strike and collect the premium based on the $1.05 bid, which annualizes to an additional 8.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.6% annualized rate in the scenario where the stock is not called away. Any upside above $37.50 would be lost if the stock rises there and is called away, but CFG shares would have to advance 6.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.4% return from this trading level, in addition to any dividends collected before the stock was called.
