Strategy To YieldBoost Toro To 10.6% Using Options

Shareholders of Toro Company (TTC) looking to boost their income beyond the stock's 1.6% annualized dividend yield can sell the March 2025 covered call at the $100 strike and collect the premium based on the $4.70 bid, which annualizes to an additional 9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.6% annualized rate in the scenario where the stock is not called away. Any upside above $100 would be lost if the stock rises there and is called away, but TTC shares would have to climb 10.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 15.8% return from this trading level, in addition to any dividends collected before the stock was called.