Shareholders of Heartland Express, Inc. (HTLD) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the March 2014 covered call at the $15 strike and collect the premium based on the 25 cents bid, which annualizes to an additional 3.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 3.7% annualized rate in the scenario where the stock is not called away. Any upside above $15 would be lost if the stock rises there and is called away, but HTLD shares would have to advance 6.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 7.8% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost HTLD From 0.6% To 3.7%
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