Strategy To YieldBoost Forward Air Corp From 1% To 20.2% Using Options

Shareholders of Forward Air Corp (FWRD) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the November covered call at the $50 strike and collect the premium based on the 5 cents bid, which annualizes to an additional 19.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20.2% annualized rate in the scenario where the stock is not called away. Any upside above $50 would be lost if the stock rises there and is called away, but FWRD shares would have to advance 5.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 5.4% return from this trading level, in addition to any dividends collected before the stock was called.