Strategy To YieldBoost Bassett Furniture Industries To 16.4% Using Options

Shareholders of Bassett Furniture Industries, Inc (BSET) looking to boost their income beyond the stock's 1.1% annualized dividend yield can sell the July covered call at the $34.80 strike and collect the premium based on the $1.60 bid, which annualizes to an additional 15.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 16.4% annualized rate in the scenario where the stock is not called away. Any upside above $34.80 would be lost if the stock rises there and is called away, but BSET shares would have to climb 9.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 14.4% return from this trading level, in addition to any dividends collected before the stock was called.