YieldBoost ARCB To 20.6% Using Options

Shareholders of ArcBest Corp (ARCB) looking to boost their income beyond the stock's 0.9% annualized dividend yield can sell the June covered call at the $40 strike and collect the premium based on the $3.10 bid, which annualizes to an additional 19.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20.6% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but ARCB shares would have to climb 8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 16.3% return from this trading level, in addition to any dividends collected before the stock was called.