Strategy To YieldBoost SCHL To 14.4% Using Options

Shareholders of Scholastic Corp (SCHL) looking to boost their income beyond the stock's 3% annualized dividend yield can sell the March 2025 covered call at the $30 strike and collect the premium based on the $1.40 bid, which annualizes to an additional 11.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 14.4% annualized rate in the scenario where the stock is not called away. Any upside above $30 would be lost if the stock rises there and is called away, but SCHL shares would have to advance 13.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 18.6% return from this trading level, in addition to any dividends collected before the stock was called.