YieldBoost Cricut From 3.4% To 24.9% Using Options
August 12, 2024 at 12:19 PM EDT
Shareholders of Cricut Inc (CRCT) looking to boost their income beyond the stock's 3.4% annualized dividend yield can sell the December covered call at the $7.10 strike and collect the premium based on the 45 cents bid, which annualizes to an additional 21.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 24.9% annualized rate in the scenario where the stock is not called away. Any upside above $7.10 would be lost if the stock rises there and is called away, but CRCT shares would have to climb 20.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 28.6% return from this trading level, in addition to any dividends collected before the stock was called.