YieldBoost WKC To 12.7% Using Options
March 27, 2024 at 11:35 AM EDT
Shareholders of World Kinect Corp (WKC) looking to boost their income beyond the stock's 2.6% annualized dividend yield can sell the November covered call at the $30 strike and collect the premium based on the $1.70 bid, which annualizes to an additional 10.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.7% 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 WKC shares would have to advance 14.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 20.9% return from this trading level, in addition to any dividends collected before the stock was called.