YieldBoost Allient To 15% Using Options
August 19, 2024 at 11:40 AM EDT
Shareholders of Allient Inc (ALNT) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the January 2025 covered call at the $22.50 strike and collect the premium based on the $1.25 bid, which annualizes to an additional 14.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15% annualized rate in the scenario where the stock is not called away. Any upside above $22.50 would be lost if the stock rises there and is called away, but ALNT shares would have to advance 7.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 13.3% return from this trading level, in addition to any dividends collected before the stock was called.