Strategy To YieldBoost VSTS To 25.8% Using Options

Shareholders of Vestis Corp (VSTS) looking to boost their income beyond the stock's 0.8% annualized dividend yield can sell the February covered call at the $17.50 strike and collect the premium based on the 50 cents bid, which annualizes to an additional 24.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 25.8% annualized rate in the scenario where the stock is not called away. Any upside above $17.50 would be lost if the stock rises there and is called away, but VSTS shares would have to advance 7.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 10.6% return from this trading level, in addition to any dividends collected before the stock was called.