YieldBoost Philip Morris International From 4.9% To 6.1% Using Options

Shareholders of Philip Morris International Inc (PM) looking to boost their income beyond the stock's 4.9% annualized dividend yield can sell the January 2017 covered call at the $92.50 strike and collect the premium based on the $1.53 bid, which annualizes to an additional 1.2% 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 $92.50 would be lost if the stock rises there and is called away, but PM shares would have to climb 14% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 15.8% return from this trading level, in addition to any dividends collected before the stock was called.