XBI Dividend Type Payments
Although XBI has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on State Street SPDR S&P Biotech ETF 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):
| State Street SPDR S&P Biotech ETF (XBI) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 127.51 |
128.10 |
127.86 |
-0.18 |
6.7M |
- |
3.3B |
XBI Dividend-Like Income Using Covered Calls
With XBI at 127.86, 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% |
3.84 |
1.1 |
| 5% |
6.39 |
1.8 |
| 10% |
12.79 |
3.5 |
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 XBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 6 |
128.00 |
2.23 |
12 |
17.8 |
0.00 (0.0%) |
| Mar 6 |
127.50 |
4.45 |
40 |
9.6 |
0.00 (0.0%) |
| 5% Yield On XBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 6 |
128.00 |
2.23 |
12 |
17.8 |
0.00 (0.0%) |
| Mar 6 |
127.50 |
4.45 |
40 |
9.6 |
0.00 (0.0%) |
| 10% Yield On XBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Feb 6 |
128.00 |
2.23 |
12 |
17.8 |
0.00 (0.0%) |
| Mar 6 |
127.50 |
4.45 |
40 |
9.6 |
0.00 (0.0%) |
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