YieldBoost Aceto Corp From 1.7% To 9.9% Using Options
March 29, 2017 at 13:36 PM EDT
Shareholders of Aceto Corp (ACET) looking to boost their income beyond the stock's 1.7% annualized dividend yield can sell the November covered call at the $17.50 strike and collect the premium based on the 80 cents bid, which annualizes to an additional 8.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.9% annualized rate in the scenario where the stock is not called away. Any upside above $17.50 would be lost if the stock rises there and is called away, but ACET shares would have to climb 14.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 19.8% return from this trading level, in addition to any dividends collected before the stock was called.