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Search by tag : What is a Trading Edge and How to Get One, There-Is-No-Free-Lunch, A High Yield Asset That Proves Money Grows On Trees, The details for this 8-month trade are:


The details for this 8-month trade are: PDF Print E-mail
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Breakeven: $23.24/share

Upside Trigger Price: $32.20

Static Call Yield: 8.21% Call Premium: $220.00

Dividend Yield: 5.72% Dividends Paid: $153.00

Total Static Yield (Call + Dividends): 13.93% or 20.95% annualized

Potential Assigned Yield: 13.93% $373.00 on sale at $30.00

Total Potential Assigned Yield (Total Static + Cap. Gain): 27.87%

The 8-month 27.87% yield equals an annualized yield of 41.8%


So, we started out with a high dividend stock yielding 7.62 %, then we locked in an additional 8.21%, (12.3% annualized), plus we set ourselves up for a total potential annualized yield of 41.8%.In addition to more than doubling your yield, this strategy also lowers your breakeven considerably, providing you with 13.93% downside protection. One other benefit to this strategy is that you know exactly what your upside potential profit is.It's enough to make you yell "Timber!"

 
 
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