YieldBoost The Charles Schwab Corporation To 3.7% Using Options

Shareholders of The Charles Schwab Corporation (SCHW) looking to boost their income beyond the stock's 0.9% annualized dividend yield can sell the January 2016 covered call at the $35 strike and collect the premium based on the $1.10 bid, which annualizes to an additional 2.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 3.7% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but SCHW shares would have to climb 26.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 30.5% return from this trading level, in addition to any dividends collected before the stock was called.