YieldBoost GBX From 2.4% To 27.7% Using Options

Shareholders of Greenbrier Companies Inc (GBX) looking to boost their income beyond the stock's 2.4% annualized dividend yield can sell the March 2016 covered call at the $35 strike and collect the premium based on the $2.75 bid, which annualizes to an additional 25.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 27.7% 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 GBX shares would have to climb 2.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10.5% return from this trading level, in addition to any dividends collected before the stock was called.