How To YieldBoost AA To 6.6% Using Options

Shareholders of Alcoa Corporation (AA) looking to boost their income beyond the stock's 1.1% annualized dividend yield can sell the January 2027 covered call at the $60 strike and collect the premium based on the $4.30 bid, which annualizes to an additional 5.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.6% annualized rate in the scenario where the stock is not called away. Any upside above $60 would be lost if the stock rises there and is called away, but AA shares would have to advance 57.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 68.7% return from this trading level, in addition to any dividends collected before the stock was called.