YieldBoost OFG Bancorp To 28.8% Using Options

Shareholders of OFG Bancorp (OFG) looking to boost their income beyond the stock's 2.5% annualized dividend yield can sell the August covered call at the $10 strike and collect the premium based on the 40 cents bid, which annualizes to an additional 26.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 28.8% annualized rate in the scenario where the stock is not called away. Any upside above $10 would be lost if the stock rises there and is called away, but OFG shares would have to advance 2.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 6.7% return from this trading level, in addition to any dividends collected before the stock was called.