How To YieldBoost Synnex Corp From 0.6% To 8.6% Using Options
May 13, 2015 at 11:36 AM EDT
Shareholders of Synnex Corp (SNX) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the December covered call at the $90 strike and collect the premium based on the $3.80 bid, which annualizes to an additional 8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.6% annualized rate in the scenario where the stock is not called away. Any upside above $90 would be lost if the stock rises there and is called away, but SNX shares would have to climb 13% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 17.8% return from this trading level, in addition to any dividends collected before the stock was called.