XBI Dividend Type Payments
Although XBI has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR Series Trust 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 Wed 9:45 AM ET):
| SPDR Series Trust SPDR S&P Biotech ETF (XBI) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 86.84 |
86.88 |
86.83 |
+0.66 |
500K |
- |
2.2B |
XBI Dividend-Like Income Using Covered Calls
With XBI at 86.83, 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% |
2.60 |
0.7 |
| 5% |
4.34 |
1.2 |
| 10% |
8.68 |
2.4 |
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 |
| Apr 4 |
86.50 |
3.25 |
24 |
12.0 |
0.00 (0.0%) |
| Apr 11 |
86.50 |
3.35 |
31 |
9.6 |
0.00 (0.0%) |
| 5% Yield On XBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Apr 4 |
86.50 |
3.25 |
24 |
12.0 |
0.00 (0.0%) |
| Apr 11 |
86.50 |
3.35 |
31 |
9.6 |
0.00 (0.0%) |
| 10% Yield On XBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Apr 4 |
86.50 |
3.25 |
24 |
12.0 |
0.00 (0.0%) |
| Apr 11 |
86.50 |
3.35 |
31 |
9.6 |
0.00 (0.0%) |
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