Strategy To YieldBoost Hooker Furniture Corp To 16.6% Using Options

Shareholders of Hooker Furniture Corp (HOFT) looking to boost their income beyond the stock's 1.4% annualized dividend yield can sell the August covered call at the $35 strike and collect the premium based on the $2.45 bid, which annualizes to an additional 15.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 16.6% 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 HOFT shares would have to advance 4.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12.1% return from this trading level, in addition to any dividends collected before the stock was called.