Shareholders of J&J Snack Foods Corp. (JJSF) looking to boost their income beyond the stock's 1.3% annualized dividend yield can sell the December covered call at the $100 strike and collect the premium based on the $5.40 bid, which annualizes to an additional 8.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.8% annualized rate in the scenario where the stock is not called away. Any upside above $100 would be lost if the stock rises there and is called away, but JJSF shares would have to climb 2.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8.3% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost J&J Snack Foods From 1.3% To 9.8% Using Options
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