YieldBoost HBAN To 13.3% Using Options

Shareholders of Huntington Bancshares Inc (HBAN) looking to boost their income beyond the stock's 4.7% annualized dividend yield can sell the October covered call at the $14 strike and collect the premium based on the 65 cents bid, which annualizes to an additional 8.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.3% annualized rate in the scenario where the stock is not called away. Any upside above $14 would be lost if the stock rises there and is called away, but HBAN shares would have to advance 7.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 12.2% return from this trading level, in addition to any dividends collected before the stock was called.