Financial News

YieldBoost CLCT From 1.2% To 15.2% Using Options

Shareholders of Collectors Universe Inc (CLCT) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the April 2021 covered call at the $80 strike and collect the premium based on the $4.40 bid, which annualizes to an additional 14% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15.2% annualized rate in the scenario where the stock is not called away. Any upside above $80 would be lost if the stock rises there and is called away, but CLCT shares would have to climb 33.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 40.7% return from this trading level, in addition to any dividends collected before the stock was called.
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