How To YieldBoost TNK To 11.6% Using Options

Shareholders of Teekay Tankers Ltd (TNK) looking to boost their income beyond the stock's 1.8% annualized dividend yield can sell the February 2025 covered call at the $65 strike and collect the premium based on the $2.35 bid, which annualizes to an additional 9.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.6% annualized rate in the scenario where the stock is not called away. Any upside above $65 would be lost if the stock rises there and is called away, but TNK shares would have to advance 16.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 20.4% return from this trading level, in addition to any dividends collected before the stock was called.