YieldBoost BANC To 12.7% Using Options
June 24, 2024 at 11:44 AM EDT
Shareholders of Banc Of California Inc (BANC) looking to boost their income beyond the stock's 3.1% annualized dividend yield can sell the January 2025 covered call at the $15 strike and collect the premium based on the 70 cents bid, which annualizes to an additional 9.6% 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 $15 would be lost if the stock rises there and is called away, but BANC shares would have to climb 16.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 21.7% return from this trading level, in addition to any dividends collected before the stock was called.