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 Mon 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
28.81 28.83 28.94 +0.42 30.7M - 0.0B

VXX Dividend-Like Income Using Covered Calls

With VXX at 28.94, 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% 0.87 0.2
5% 1.45 0.4
10% 2.89 0.8

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 VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 24 40.00 0.02 5 0.4 11.17 (38.6%)
May 31 49.00 0.03 12 0.3 20.17 (69.7%)
5% Yield On VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 24 40.00 0.02 5 0.4 11.17 (38.6%)
May 31 45.00 0.05 12 0.4 16.17 (55.9%)
10% Yield On VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
May 24 37.00 0.04 5 0.8 8.17 (28.2%)
May 31 40.00 0.11 12 0.9 11.17 (38.6%)

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