YieldBoost Washington Real Estate Investment Trust From 2.8% To 40.5% Using Options

Shareholders of Washington Real Estate Investment Trust (WRE) looking to boost their income beyond the stock's 2.8% annualized dividend yield can sell the August covered call at the $25 strike and collect the premium based on the 5 cents bid, which annualizes to an additional 37.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 40.5% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but WRE shares would have to climb 3.2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 3.4% return from this trading level, in addition to any dividends collected before the stock was called.