IBB Dividend Type Payments

iShares Nasdaq Biotechnology Index Fund dividend

Although IBB has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on iShares Nasdaq Biotechnology Index Fund to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Thu 4:16 PM ET):

iShares Nasdaq Biotechnology Index Fund (IBB)
Bid Ask Last Change Volume P/E Market Cap
102.76 104.56 103.89 -1.59 1.9M - 0.0B

IBB Dividend-Like Income Using Covered Calls

With IBB at 103.89, here's a table showing how big the annual "dividend" (ie. total annual call premium received) would need to be to attain 3%, 5%, and 10% annual yields. Also shown is the equivalent number of cents/day necessary to achieve each yield:

Annual Yield Annual Premium Cents/Day
3% 3.12 0.9
5% 5.19 1.4
10% 10.39 2.8

So now we need to find out of the money covered calls that pay at least the prescribed cents/day amount of time premium. That will generate income and, because they are out of the money, leave room for some upside potential on the stock. Here are some examples:

3% Yield On IBB Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 21 109.50 0.10 9 1.1 4.94 (4.8%)
Dec 28 110.00 0.20 16 1.3 5.44 (5.2%)
5% Yield On IBB Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 21 109.00 0.15 9 1.7 4.44 (4.3%)
Dec 28 109.50 0.25 16 1.6 4.94 (4.8%)
10% Yield On IBB Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Dec 21 108.00 0.30 9 3.3 3.44 (3.3%)
Dec 28 108.00 0.50 16 3.1 3.44 (3.3%)

Want to increase dividends with covered calls?  Sign Up For A Free Trial

 
Top 10 Open Interest For Dec 21 Expiration     Top 5 High Yield
1.SPY dividend 6.EWZ dividend   1. dividend
2.EEM dividend 7.FXI dividend   2. dividend
3.SPX dividend 8.GE dividend   3. dividend
4.QQQ dividend 9.VXX dividend   4. dividend
5.IWM dividend 10.BAC dividend   5. dividend

Want more examples? IAU Dividend | IBCD Dividend