How To YieldBoost Bowlero From 1.6% To 11.9% Using Options
June 24, 2024 at 11:45 AM EDT
Shareholders of Bowlero Corp (BOWL) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the February 2025 covered call at the $17.50 strike and collect the premium based on the 95 cents bid, which annualizes to an additional 10.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.9% annualized rate in the scenario where the stock is not called away. Any upside above $17.50 would be lost if the stock rises there and is called away, but BOWL shares would have to advance 26.2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 33% return from this trading level, in addition to any dividends collected before the stock was called.