Shareholders of Buckle, Inc. (BKE) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the March 2014 covered call at the $52.50 strike and collect the premium based on the $3.10 bid, which annualizes to an additional 17% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 18.5% annualized rate in the scenario where the stock is not called away. Any upside above $52.50 would be lost if the stock rises there and is called away, but BKE shares would have to advance 1.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 7.5% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost Buckle To 18.5% Using Options
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