YieldBoost HCKT From 1.6% To 25.6% Using Options

Shareholders of Hackett Group Inc (HCKT) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the November covered call at the $17.50 strike and collect the premium based on the 30 cents bid, which annualizes to an additional 24% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 25.6% annualized rate in the scenario where the stock is not called away. Any upside above $17.50 would be lost if the stock rises there and is called away, but HCKT shares would have to climb 7.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9.6% return from this trading level, in addition to any dividends collected before the stock was called.