Strategy To YieldBoost ARIS To 19.7% Using Options

Shareholders of Aris Water Solutions Inc (ARIS) looking to boost their income beyond the stock's 2.5% annualized dividend yield can sell the January 2025 covered call at the $17.50 strike and collect the premium based on the $1.15 bid, which annualizes to an additional 17.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 19.7% 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 ARIS shares would have to climb 5.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12.9% return from this trading level, in addition to any dividends collected before the stock was called.