How To YieldBoost Teekay Corp From 2.3% To 20.5% Using Options

Shareholders of Teekay Corp (TK) looking to boost their income beyond the stock's 2.3% annualized dividend yield can sell the July 2018 covered call at the $10 strike and collect the premium based on the $1.00 bid, which annualizes to an additional 18.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20.5% 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 TK shares would have to climb 6.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 17% return from this trading level, in addition to any dividends collected before the stock was called.