VXX Dividend Type Payments

iPath Series B S&P 500 VIX Short-Term Futures ETN dividend

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

iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX)
Bid Ask Last Change Volume P/E Market Cap
12.75 12.76 12.79 -0.45 14.5M - 0.0B

VXX Dividend-Like Income Using Covered Calls

With VXX at 12.79, here's a table showing how big the annual "dividend" (i.e. 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% 0.38 0.1
5% 0.64 0.2
10% 1.28 0.4

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
Jun 7 13.00 0.60 36 1.7 0.24 (1.9%)
May 10 13.00 0.21 8 2.6 0.24 (1.9%)
5% Yield On VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jun 7 13.00 0.60 36 1.7 0.24 (1.9%)
May 10 13.00 0.21 8 2.6 0.24 (1.9%)
10% Yield On VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Jun 7 13.00 0.60 36 1.7 0.24 (1.9%)
May 10 13.00 0.21 8 2.6 0.24 (1.9%)

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