YieldBoost Assurant From 1.6% To 5.9% Using Options
March 20, 2024 at 12:04 PM EDT
Shareholders of Assurant Inc (AIZ) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the September covered call at the $200 strike and collect the premium based on the $3.90 bid, which annualizes to an additional 4.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 5.9% 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 11.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 13.7% return from this trading level, in addition to any dividends collected before the stock was called.