YieldBoost Resources Connection To 19.6% Using Options

Shareholders of Resources Connection Inc (RECN) looking to boost their income beyond the stock's 2.2% annualized dividend yield can sell the February 2015 covered call at the $15 strike and collect the premium based on the 65 cents bid, which annualizes to an additional 17.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 19.6% 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 RECN shares would have to climb 2.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 6.9% return from this trading level, in addition to any dividends collected before the stock was called.