Strategy To YieldBoost Assurant From 1.7% To 9.9% Using Options
June 18, 2024 at 12:45 PM EDT
Shareholders of Assurant Inc (AIZ) looking to boost their income beyond the stock's 1.7% annualized dividend yield can sell the December covered call at the $175 strike and collect the premium based on the $7.00 bid, which annualizes to an additional 8.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.9% annualized rate in the scenario where the stock is not called away. Any upside above $175 would be lost if the stock rises there and is called away, but AIZ shares would have to advance 4.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8.3% return from this trading level, in addition to any dividends collected before the stock was called.