YieldBoost CBRL To 20.8% Using Options

Shareholders of Cracker Barrel Old Country Store Inc (CBRL) looking to boost their income beyond the stock's 3% annualized dividend yield can sell the December covered call at the $140 strike and collect the premium based on the $8.10 bid, which annualizes to an additional 17.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20.8% annualized rate in the scenario where the stock is not called away. Any upside above $140 would be lost if the stock rises there and is called away, but CBRL shares would have to climb 3.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9.1% return from this trading level, in addition to any dividends collected before the stock was called.
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