YieldBoost Universal From 6% To 121.6% Using Options

Shareholders of Universal Corp (UVV) looking to boost their income beyond the stock's 6% annualized dividend yield can sell the August covered call at the $90 strike and collect the premium based on the $14.60 bid, which annualizes to an additional 115.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 121.6% annualized rate in the scenario where the stock is not called away. Any upside above $90 would be lost if the stock rises there and is called away, but UVV shares would have to climb 69.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 97.3% return from this trading level, in addition to any dividends collected before the stock was called.