YieldBoost XEL From 3.9% To 10% Using Options

Shareholders of Xcel Energy Inc (XEL) looking to boost their income beyond the stock's 3.9% annualized dividend yield can sell the December covered call at the $60 strike and collect the premium based on the $1.45 bid, which annualizes to an additional 6.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10% annualized rate in the scenario where the stock is not called away. Any upside above $60 would be lost if the stock rises there and is called away, but XEL shares would have to climb 7.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 10% return from this trading level, in addition to any dividends collected before the stock was called.