How To YieldBoost B&G Foods To 27.8% Using Options

Shareholders of B&G Foods Inc (BGS) looking to boost their income beyond the stock's 10.6% annualized dividend yield can sell the May covered call at the $8 strike and collect the premium based on the 45 cents 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 27.8% annualized rate in the scenario where the stock is not called away. Any upside above $8 would be lost if the stock rises there and is called away, but BGS shares would have to climb 11.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 17.4% return from this trading level, in addition to any dividends collected before the stock was called.