YieldBoost Avery Dennison Corp From 1.8% To 11.7% Using Options

Shareholders of Avery Dennison Corp (AVY) looking to boost their income beyond the stock's 1.8% annualized dividend yield can sell the October covered call at the $115 strike and collect the premium based on the $5.50 bid, which annualizes to an additional 9.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.7% annualized rate in the scenario where the stock is not called away. Any upside above $115 would be lost if the stock rises there and is called away, but AVY shares would have to climb 1.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 6.5% return from this trading level, in addition to any dividends collected before the stock was called.