YieldBoost TWIN From 1.9% To 8% Using Options

Shareholders of Twin Disc Incorporated (TWIN) looking to boost their income beyond the stock's 1.9% annualized dividend yield can sell the September covered call at the $22.50 strike and collect the premium based on the 70 cents bid, which annualizes to an additional 6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8% annualized rate in the scenario where the stock is not called away. Any upside above $22.50 would be lost if the stock rises there and is called away, but TWIN shares would have to advance 20.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 24.7% return from this trading level, in addition to any dividends collected before the stock was called.