YieldBoost KRO From 3.6% To 21.2% Using Options

Shareholders of Kronos Worldwide Inc (KRO) looking to boost their income beyond the stock's 3.6% annualized dividend yield can sell the August covered call at the $17.50 strike and collect the premium based on the $1.10 bid, which annualizes to an additional 17.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 21.2% 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 KRO shares would have to advance 3.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10.2% return from this trading level, in addition to any dividends collected before the stock was called.