Shareholders of Heartland Express (HTLD) looking to boost their income beyond the stock's 0.4% annualized dividend yield can sell the June covered call at the $20 strike and collect the premium based on the $1.20 bid, which annualizes to an additional 13% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.4% annualized rate in the scenario where the stock is not called away. Any upside above $20 would be lost if the stock rises there and is called away, but HTLD shares would have to climb 1.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 7.2% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost Heartland Express To 13.4% Using Options
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