Strategy To YieldBoost GasLog To 19.2% Using Options
April 27, 2016 at 11:43 AM EDT
Shareholders of GasLog Ltd (GLOG) looking to boost their income beyond the stock's 4.3% annualized dividend yield can sell the August covered call at the $15 strike and collect the premium based on the 60 cents bid, which annualizes to an additional 14.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 19.2% annualized rate in the scenario where the stock is not called away. Any upside above $15 would be lost if the stock rises there and is called away, but GLOG shares would have to advance 16.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 20.9% return from this trading level, in addition to any dividends collected before the stock was called.