YieldBoost ARKO To 657.2% Using Options
September 18, 2024 at 11:37 AM EDT
Shareholders of ARKO Corp (ARKO) looking to boost their income beyond the stock's 1.7% annualized dividend yield can sell the September covered call at the $7.50 strike and collect the premium based on the 25 cents bid, which annualizes to an additional 655.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 657.2% annualized rate in the scenario where the stock is not called away. Any upside above $7.50 would be lost if the stock rises there and is called away, but ARKO shares would have to climb 7.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 11.3% return from this trading level, in addition to any dividends collected before the stock was called.