YieldBoost Fred's To 25.6% Using Options
March 24, 2015 at 11:30 AM EDT
Shareholders of Fred's Inc. (FRED) looking to boost their income beyond the stock's 1.3% annualized dividend yield can sell the April covered call at the $20 strike and collect the premium based on the 30 cents bid, which annualizes to an additional 24.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 25.6% annualized rate in the scenario where the stock is not called away..