YieldBoost BKW From 1% To 2.2% Using Options

Shareholders of Burger King Worldwide Inc (BKW) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the January 2017 covered call at the $42 strike and collect the premium based on the 90 cents bid, which annualizes to an additional 1.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 2.2% annualized rate in the scenario where the stock is not called away. Any upside above $42 would be lost if the stock rises there and is called away, but BKW shares would have to advance 33.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 36.4% return from this trading level, in addition to any dividends collected before the stock was called.