YieldBoost Otis Worldwide To 13% Using Options

Shareholders of Otis Worldwide Corp (OTIS) looking to boost their income beyond the stock's 1.7% annualized dividend yield can sell the November covered call at the $100 strike and collect the premium based on the $5.30 bid, which annualizes to an additional 11.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13% annualized rate in the scenario where the stock is not called away. Any upside above $100 would be lost if the stock rises there and is called away, but OTIS shares would have to climb 3.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 8.7% return from this trading level, in addition to any dividends collected before the stock was called.