YieldBoost OC From 2.1% To 18.5% Using Options

Shareholders of Owens Corning (OC) looking to boost their income beyond the stock's 2.1% annualized dividend yield can sell the May 2019 covered call at the $45 strike and collect the premium based on the $2.60 bid, which annualizes to an additional 16.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 18.5% annualized rate in the scenario where the stock is not called away. Any upside above $45 would be lost if the stock rises there and is called away, but OC shares would have to advance 10.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 16.6% return from this trading level, in addition to any dividends collected before the stock was called.