Strategy To YieldBoost Westlake Chemical Corp From 1% To 8.7% Using Options

Shareholders of Westlake Chemical Corp (WLK) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the April 2018 covered call at the $90 strike and collect the premium based on the $3.20 bid, which annualizes to an additional 7.6% 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 $90 would be lost if the stock rises there and is called away, but WLK shares would have to advance 8.2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12% return from this trading level, in addition to any dividends collected before the stock was called.