YieldBoost ALTG From 2.8% To 11.2% Using Options
June 06, 2024 at 11:41 AM EDT
Shareholders of Alta Equipment Group Inc (ALTG) looking to boost their income beyond the stock's 2.8% annualized dividend yield can sell the October covered call at the $10 strike and collect the premium based on the 25 cents 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 11.2% annualized rate in the scenario where the stock is not called away. Any upside above $10 would be lost if the stock rises there and is called away, but ALTG shares would have to climb 23% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 26.1% return from this trading level, in addition to any dividends collected before the stock was called.