VXZ Dividend Type Payments

IPATH S&P 500 VIX MT FUTURES E dividend

Although VXZ has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on IPATH S&P 500 VIX MT 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 MT FUTURES E (VXZ)
Bid Ask Last Change Volume P/E Market Cap
19.43 19.45 19.47 +0.04 52K - 0.0B

VXZ Dividend-Like Income Using Covered Calls

With VXZ at 19.47, 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% 0.58 0.2
5% 0.97 0.3
10% 1.95 0.5

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 VXZ Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 22.00 0.20 29 0.7 2.55 (13.1%)
Dec 21 24.00 0.15 64 0.2 4.55 (23.4%)
5% Yield On VXZ Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 22.00 0.20 29 0.7 2.55 (13.1%)
Dec 21 23.00 0.30 64 0.5 3.55 (18.2%)
10% Yield On VXZ Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Nov 16 22.00 0.20 29 0.7 2.55 (13.1%)
Dec 21 21.00 0.55 64 0.9 1.55 (8.0%)

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