Shareholders of Casey's General Stores (CASY) looking to boost their income beyond the stock's 1.1% annualized dividend yield can sell the August covered call at the $72.50 strike and collect the premium based on the $3.50 bid, which annualizes to an additional 8.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.4% annualized rate in the scenario where the stock is not called away. Any upside above $72.50 would be lost if the stock rises there and is called away, but CASY shares would have to climb 6.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 11.3% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost CASY To 9.4% Using Options
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