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 Mon 4:16 PM ET):

IPATH S&P 500 VIX MT FUTURES E (VXZ)
Bid Ask Last Change Volume P/E Market Cap
18.01 18.05 18.01 +0.45 128K - 0.0B

VXZ Dividend-Like Income Using Covered Calls

With VXZ at 18.01, 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% 0.54 0.1
5% 0.90 0.2
10% 1.80 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
Sep 21 19.00 0.25 40 0.6 0.95 (5.3%)
5% Yield On VXZ Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 21 19.00 0.25 40 0.6 0.95 (5.3%)
10% Yield On VXZ Using Covered Calls
Expiration Strike Call Bid Days Cents/Day Upside Potential
Sep 21 19.00 0.25 40 0.6 0.95 (5.3%)

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