How To YieldBoost SSTK From 3.1% To 24.5% Using Options

Shareholders of Shutterstock Inc (SSTK) looking to boost their income beyond the stock's 3.1% annualized dividend yield can sell the November covered call at the $42.50 strike and collect the premium based on the $3.20 bid, which annualizes to an additional 21.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 24.5% annualized rate in the scenario where the stock is not called away. Any upside above $42.50 would be lost if the stock rises there and is called away, but SSTK shares would have to advance 12.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 20.6% return from this trading level, in addition to any dividends collected before the stock was called.