How To YieldBoost BCO To 9.2% Using Options

Shareholders of Brinks Co (BCO) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the December covered call at the $35 strike and collect the premium based on the $1.50 bid, which annualizes to an additional 8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.2% 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 BCO shares would have to climb 8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12.6% return from this trading level, in addition to any dividends collected before the stock was called.