Shareholders of Bassett Furniture Industries, Inc (BSET - Get Report) looking to boost their income beyond the stock's 1.3% annualized dividend yield can sell the January 2014 covered call at the $17.50 strike and collect the premium based on the 90 cents bid, which annualizes to an additional 10% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.3% annualized rate in the scenario where the stock is not called away. Any upside above $17.50 would be lost if the stock rises there and is called away, but BSET shares would have to climb 13.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 18.9% return from this trading level, in addition to any dividends collected before the stock was called.In general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Bassett Furniture Industries, Inc, looking at the dividend history chart for BSET below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 1.3% annualized dividend yield. Below is a chart showing BSET's trailing twelve month trading history, with the $17.50 strike highlighted in red: The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the January 2014 covered call at the $17.50 strike gives good reward for the risk of having given away the upside beyond $17.50. ( Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for Bassett Furniture Industries, Inc (considering the last 249 trading day closing values as well as today's price of $15.47) to be 37%. For other call options contract ideas at the various different available expirations, visit the BSET Stock Options page of StockOptionsChannel.com.
More from Stocks
Tesla Board Must Face Trial to Defend Huge Elon Musk Pay Deal: Report
Judge rules Elon Musk held sway over the company's compensation committee in designing package that could balloon to $70 billion.
Facebook Says It's Suspended 'Tens of Thousands' of Apps Following Investigation
Facebook says it has identified thousands of problematic apps and developers following an investigation in the wake of the Cambridge Analytica scandal last year.
Stocks End Down as China Trade Officials Cut Visit Short
Stocks finish down Friday after China trade officials cut their visit to the U.S. short.
China Trade Issues Cause Concern as Negative Seasonality Looms
Since 1960, the week following the third Friday of September has produced the most negative results of any week of the entire year.