YieldBoost BSET From 1.2% To 10% Using Options

Shareholders of Bassett Furniture Industries, Inc (BSET) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the January 2016 covered call at the $35 strike and collect the premium based on the 60 cents bid, which annualizes to an additional 8.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but BSET shares would have to advance 11.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 13.4% return from this trading level, in addition to any dividends collected before the stock was called.