How To YieldBoost Scripps Networks Interactive From 1.4% To 3.3% Using Options

Shareholders of Scripps Networks Interactive Inc (SNI) looking to boost their income beyond the stock's 1.4% annualized dividend yield can sell the March 2018 covered call at the $87.50 strike and collect the premium based on the 80 cents bid, which annualizes to an additional 1.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 3.3% annualized rate in the scenario where the stock is not called away. Any upside above $87.50 would be lost if the stock rises there and is called away, but SNI shares would have to advance 2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 2.9% return from this trading level, in addition to any dividends collected before the stock was called.