YieldBoost Gold Resource Corp From 3.6% To 11.3% Using Options

Shareholders of Gold Resource Corp (GORO) looking to boost their income beyond the stock's 3.6% annualized dividend yield can sell the September covered call at the $5 strike and collect the premium based on the 10 cents bid, which annualizes to an additional 7.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.3% annualized rate in the scenario where the stock is not called away. Any upside above $5 would be lost if the stock rises there and is called away, but GORO shares would have to climb 48.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 51.3% return from this trading level, in addition to any dividends collected before the stock was called.