How To YieldBoost Big 5 Sporting Goods Corp From 4.1% To 39.5% Using Options

Shareholders of Big 5 Sporting Goods Corp (BGFV) looking to boost their income beyond the stock's 4.1% annualized dividend yield can sell the December covered call at the $10 strike and collect the premium based on the 55 cents bid, which annualizes to an additional 35.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 39.5% annualized rate in the scenario where the stock is not called away. Any upside above $10 would be lost if the stock rises there and is called away, but BGFV shares would have to advance 0.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 6.3% return from this trading level, in addition to any dividends collected before the stock was called.