YieldBoost Becton, Dickinson and Co. From 1.6% To 7.3% Using Options

Shareholders of Becton, Dickinson and Co. (NYSE: BDX) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the September covered call at the $150 strike and collect the premium based on the $4.00 bid, which annualizes to an additional 5.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.3% annualized rate in the scenario where the stock is not called away. Any upside above $150 would be lost if the stock rises there and is called away, but BDX shares would have to advance 3.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 6% return from this trading level, in addition to any dividends collected before the stock was called.

Click here to find out Top YieldBoost Calls of Stocks Analysts Like »

In general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Becton, Dickinson and Co., looking at the dividend history chart for BDX below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 1.6% annualized dividend yield.

Below is a chart showing BDX's trailing twelve month trading history, with the $150 strike highlighted in red:

Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for Becton, Dickinson and Co. (considering the last 251 trading day closing values as well as today's price of $145.51) to be 17%. For other call options contract ideas at the various different available expirations, visit the Find out which 15 call and put options traders are talking about today.