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September 01, 2020 1:20pm
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YieldBoost VTRS To 8.9% Using Options

Shareholders of Viatris Inc (VTRS) looking to boost their income beyond the stock's 3.7% annualized dividend yield can sell the January 2026 covered call at the $15 strike and collect the premium based on the 80 cents bid, which annualizes to an additional 5.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.9% annualized rate in the scenario where the stock is not called away. Any upside above $15 would be lost if the stock rises there and is called away, but VTRS shares would have to advance 14.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 21.1% return from this trading level, in addition to any dividends collected before the stock was called.
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