YieldBoost AVY To 6% Using Options

Shareholders of Avery Dennison Corp (AVY) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the October covered call at the $240 strike and collect the premium based on the $5.70 bid, which annualizes to an additional 4.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6% annualized rate in the scenario where the stock is not called away. Any upside above $240 would be lost if the stock rises there and is called away, but AVY shares would have to climb 10.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 13.3% return from this trading level, in addition to any dividends collected before the stock was called.