YieldBoost Consolidated Edison From 4.5% To 7.7% Using Options

Shareholders of Consolidated Edison (NYSE: ED) looking to boost their income beyond the stock’s 4.5% annualized dividend yield can sell the January 2015 covered call at the $57.50 strike and collect the premium based on the $1.90 bid, which annualizes to an additional 3.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.7% annualized rate in the scenario where the stock is not called away. Any upside above $57.50 would be lost if the stock rises there and is called away, but ED shares would have to advance 3.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 7.1% return from this trading level, in addition to any dividends collected before the stock was called.

http://www.forbes.com/sites/stockoptionschannel/2013/12/24/yieldboost-consolidated-edison-from-4-5-to-7-7-using-options/