YieldBoost BR To 12.4% Using Options
June 17, 2024 at 11:34 AM EDT
Shareholders of Broadridge Financial Solutions (BR) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the November covered call at the $200 strike and collect the premium based on the $8.70 bid, which annualizes to an additional 10.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.4% annualized rate in the scenario where the stock is not called away. Any upside above $200 would be lost if the stock rises there and is called away, but BR shares would have to advance 2.7% 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.
