VXX Dividend Type Payments

IPATH S&P 500 VIX ST FUTURES E dividend

Although VXX has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on IPATH S&P 500 VIX ST FUTURES E to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 4:16 PM ET):

IPATH S&P 500 VIX ST FUTURES E (VXX)
Bid Ask Last Change Volume P/E Market Cap
34.66 34.69 34.51 +0.49 65.3M - 0.0B

VXX Dividend-Like Income Using Covered Calls

With VXX at 34.51, 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% 1.04 0.3
5% 1.73 0.5
10% 3.45 0.9

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 VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 68.00 0.02 5 0.4 33.31 (96.5%)
Oct 26 76.00 0.07 12 0.6 41.31 (119.7%)
5% Yield On VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 61.00 0.03 5 0.6 26.31 (76.2%)
Oct 26 76.00 0.07 12 0.6 41.31 (119.7%)
10% Yield On VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Oct 19 57.00 0.06 5 1.2 22.31 (64.6%)
Oct 26 67.00 0.12 12 1.0 32.31 (93.6%)

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