YieldBoost SNX From 0.7% To 13.1% Using Options
October 20, 2021 at 11:47 AM EDT
Shareholders of SYNNEX Corp (SNX) looking to boost their income beyond the stock's 0.7% annualized dividend yield can sell the March 2022 covered call at the $115 strike and collect the premium based on the $5.40 bid, which annualizes to an additional 12.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.1% annualized rate in the scenario where the stock is not called away. Any upside above $115 would be lost if the stock rises there and is called away, but SNX shares would have to advance 7.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 12.3% return from this trading level, in addition to any dividends collected before the stock was called.
