YieldBoost CWCO To 16.6% Using Options

Shareholders of Consolidated Water Co Ltd (CWCO) looking to boost their income beyond the stock's 2.5% annualized dividend yield can sell the August covered call at the $12.50 strike and collect the premium based on the 65 cents bid, which annualizes to an additional 14.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 16.6% annualized rate in the scenario where the stock is not called away. Any upside above $12.50 would be lost if the stock rises there and is called away, but CWCO shares would have to climb 4.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10% return from this trading level, in addition to any dividends collected before the stock was called.