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 Fri 4:16 PM ET):

IPATH S&P 500 VIX ST FUTURES E (VXX)
Bid Ask Last Change Volume P/E Market Cap
29.41 29.45 29.40 -0.87 39.5M - 0.0B

VXX Dividend-Like Income Using Covered Calls

With VXX at 29.40, 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% 0.88 0.2
5% 1.47 0.4
10% 2.94 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
Aug 24 70.00 0.03 8 0.4 40.55 (137.9%)
Aug 31 64.00 0.05 15 0.3 34.55 (117.5%)
5% Yield On VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 24 50.00 0.05 8 0.6 20.55 (69.9%)
Aug 31 53.00 0.07 15 0.5 23.55 (80.1%)
10% Yield On VXX Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Aug 24 45.00 0.08 8 1.0 15.55 (52.9%)
Aug 31 46.00 0.13 15 0.9 16.55 (56.3%)

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