How To YieldBoost BXP To 10.9% Using Options
November 12, 2024 at 11:33 AM EST
Shareholders of BXP Inc (BXP) looking to boost their income beyond the stock's 4.8% annualized dividend yield can sell the January 2026 covered call at the $92.50 strike and collect the premium based on the $5.80 bid, which annualizes to an additional 6.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.9% annualized rate in the scenario where the stock is not called away. Any upside above $92.50 would be lost if the stock rises there and is called away, but BXP shares would have to advance 14.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 21.5% return from this trading level, in addition to any dividends collected before the stock was called.