YieldBoost PH Glatfelter To 8.7% Using Options
August 21, 2014 at 11:34 AM EDT
Shareholders of PH Glatfelter (GLT) looking to boost their income beyond the stock's 1.9% annualized dividend yield can sell the April 2015 covered call at the $25 strike and collect the premium based on the $1.05 bid, which annualizes to an additional 6.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.7% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but GLT shares would have to advance 6.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 11.2% return from this trading level, in addition to any dividends collected before the stock was called.