How To YieldBoost Western Refining From 5.5% To 11.3% Using Options

Shareholders of Western Refining Inc (WNR) looking to boost their income beyond the stock's 5.5% annualized dividend yield can sell the January 2018 covered call at the $35 strike and collect the premium based on the $2.15 bid, which annualizes to an additional 5.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.3% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but WNR shares would have to advance 25.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 33.5% return from this trading level, in addition to any dividends collected before the stock was called.