Shareholders of IDT Corp. (IDT) looking to boost their income beyond the stock's 3% annualized dividend yield can sell the December covered call at the $22.50 strike and collect the premium based on the $1.20 bid, which annualizes to an additional 11.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 14.8% annualized rate in the scenario where the stock is not called away. Any upside above $22.50 would be lost if the stock rises there and is called away, but IDT shares would have to climb 12.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 18.4% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost IDT From 3% To 14.8%
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