How To YieldBoost NNBR To 11.1% Using Options

Shareholders of NN, Inc (NNBR) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the June 2018 covered call at the $30 strike and collect the premium based on the $1.60 bid, which annualizes to an additional 10.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.1% annualized rate in the scenario where the stock is not called away. Any upside above $30 would be lost if the stock rises there and is called away, but NNBR shares would have to climb 9.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 15.3% return from this trading level, in addition to any dividends collected before the stock was called.