YieldBoost BancorpSouth Bank To 9.3% Using Options

Shareholders of BancorpSouth Bank (BXS) looking to boost their income beyond the stock's 0.4% annualized dividend yield can sell the July 2018 covered call at the $35 strike and collect the premium based on the $1.75 bid, which annualizes to an additional 8.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.3% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but BXS shares would have to advance 6.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 11.9% return from this trading level, in addition to any dividends collected before the stock was called.