YieldBoost Argan To 14.2% Using Options

Shareholders of Argan Inc (AGX) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the April 2018 covered call at the $70 strike and collect the premium based on the $4.30 bid, which annualizes to an additional 12.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 14.2% annualized rate in the scenario where the stock is not called away. Any upside above $70 would be lost if the stock rises there and is called away, but AGX shares would have to advance 3.2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9.5% return from this trading level, in addition to any dividends collected before the stock was called.