How To YieldBoost Johnson Controls International To 6.1% Using Options
July 23, 2024 at 11:34 AM EDT
Shareholders of Johnson Controls International plc (JCI) looking to boost their income beyond the stock's 2.1% annualized dividend yield can sell the January 2026 covered call at the $85 strike and collect the premium based on the $4.00 bid, which annualizes to an additional 3.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.1% annualized rate in the scenario where the stock is not called away. Any upside above $85 would be lost if the stock rises there and is called away, but JCI shares would have to climb 24% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 29.8% return from this trading level, in addition to any dividends collected before the stock was called.