YieldBoost PJC To 12% Using Options

Shareholders of Piper Jaffray Companies (PJC) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the June 2018 covered call at the $85 strike and collect the premium based on the $4.10 bid, which annualizes to an additional 10.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12% annualized rate in the scenario where the stock is not called away. Any upside above $85 would be lost if the stock rises there and is called away, but PJC shares would have to climb 8.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 13.3% return from this trading level, in addition to any dividends collected before the stock was called.