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 Fri 4:16 PM ET):
| SPDR Series Trust SPDR S&P Biotech ETF (XBI) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 94.16 |
94.34 |
94.12 |
-1.58 |
9.3M |
- |
2.4B |
XBI Dividend-Like Income Using Covered Calls
With XBI at 94.12, 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% |
2.82 |
0.8 |
| 5% |
4.71 |
1.3 |
| 10% |
9.41 |
2.6 |
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 |
| Oct 3 |
100.00 |
0.49 |
22 |
2.2 |
5.66 (6.0%) |
| Oct 10 |
100.00 |
0.53 |
29 |
1.8 |
5.66 (6.0%) |
| 5% Yield On XBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Oct 3 |
100.00 |
0.49 |
22 |
2.2 |
5.66 (6.0%) |
| Oct 10 |
100.00 |
0.53 |
29 |
1.8 |
5.66 (6.0%) |
| 10% Yield On XBI Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Oct 3 |
94.00 |
2.30 |
22 |
8.9 |
0.00 (0.0%) |
| Oct 10 |
94.00 |
2.79 |
29 |
8.4 |
0.00 (0.0%) |
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