YieldBoost Corteva From 1.2% To 13.1% Using Options
June 24, 2024 at 11:45 AM EDT
Shareholders of Corteva Inc (CTVA) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the December covered call at the $55 strike and collect the premium based on the $3.10 bid, which annualizes to an additional 11.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.1% annualized rate in the scenario where the stock is not called away. Any upside above $55 would be lost if the stock rises there and is called away, but CTVA shares would have to advance 3.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9.5% return from this trading level, in addition to any dividends collected before the stock was called.