YieldBoost ARKO From 1.9% To 10.9% Using Options

Shareholders of ARKO Corp (ARKO) looking to boost their income beyond the stock's 1.9% annualized dividend yield can sell the August covered call at the $7.50 strike and collect the premium based on the 35 cents 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 10.9% annualized rate in the scenario where the stock is not called away. Any upside above $7.50 would be lost if the stock rises there and is called away, but ARKO shares would have to climb 18.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 24% return from this trading level, in addition to any dividends collected before the stock was called.