YieldBoost Caleres To 8.1% Using Options

Shareholders of Caleres Inc (CAL) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the December 2022 covered call at the $35 strike and collect the premium based on the $1.80 bid, which annualizes to an additional 6.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.1% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but CAL shares would have to advance 55.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 63.6% return from this trading level, in addition to any dividends collected before the stock was called.
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