YieldBoost Assurant From 1.5% To 10.6% Using Options
September 17, 2024 at 11:34 AM EDT
Shareholders of Assurant Inc (AIZ) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the March 2025 covered call at the $200 strike and collect the premium based on the $9.00 bid, which annualizes to an additional 9.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.6% annualized rate in the scenario where the stock is not called away. Any upside above $200 would be lost if the stock rises there and is called away, but AIZ shares would have to climb 2.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 7.5% return from this trading level, in addition to any dividends collected before the stock was called.