YieldBoost CB From 2.1% To 9.2% Using Options

Shareholders of Chubb Ltd (CB) looking to boost their income beyond the stock's 2.1% annualized dividend yield can sell the November covered call at the $140 strike and collect the premium based on the $5.50 bid, which annualizes to an additional 7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.2% annualized rate in the scenario where the stock is not called away. Any upside above $140 would be lost if the stock rises there and is called away, but CB shares would have to climb 1.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 5.7% return from this trading level, in addition to any dividends collected before the stock was called.