XPH Dividend Type Payments

Although XPH has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on SPDR S&P Pharmaceuticals ETF 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):

SPDR S&P Pharmaceuticals ETF (XPH)
Bid	Ask	Last	Change	Volume	P/E	Market Cap
44.03	45.59	44.71	-0.22	40K	-	0.7B

XPH Dividend-Like Income Using Covered Calls

With XPH at 44.71, 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%	1.34	0.4
5%	2.24	0.6
10%	4.47	1.2

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 XPH Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Oct 17	46.00	2.15	239	0.9	0.41 (0.9%)
Jul 18	46.00	1.45	148	1.0	0.41 (0.9%)

5% Yield On XPH Using Covered Calls
Expiration	Strike	Call Bid	Days	Cents/Day	Upside Potential
Oct 17	46.00	2.15	239	0.9	0.41 (0.9%)
Jul 18	46.00	1.45	148	1.0	0.41 (0.9%)

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