YieldBoost AMP To 15.8% Using Options

Shareholders of Ameriprise Financial Inc (AMP) looking to boost their income beyond the stock's 1.9% annualized dividend yield can sell the June covered call at the $125 strike and collect the premium based on the $7.10 bid, which annualizes to an additional 13.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15.8% annualized rate in the scenario where the stock is not called away. Any upside above $125 would be lost if the stock rises there and is called away, but AMP shares would have to advance 0.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 6.2% return from this trading level, in addition to any dividends collected before the stock was called.