Strategy To YieldBoost People's United Financial To 19.3% Using Options

Shareholders of People's United Financial Inc (PBCT) looking to boost their income beyond the stock's 4.1% annualized dividend yield can sell the February 2022 covered call at the $18 strike and collect the premium based on the 80 cents bid, which annualizes to an additional 15.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 19.3% annualized rate in the scenario where the stock is not called away. Any upside above $18 would be lost if the stock rises there and is called away, but PBCT shares would have to advance 1.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 6.3% return from this trading level, in addition to any dividends collected before the stock was called.