YieldBoost KOP From 0.9% To 24.8% Using Options

Shareholders of Koppers Holdings Inc (KOP) looking to boost their income beyond the stock's 0.9% annualized dividend yield can sell the March covered call at the $35 strike and collect the premium based on the $1.50 bid, which annualizes to an additional 23.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 24.8% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but KOP shares would have to advance 11.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 16.5% return from this trading level, in addition to any dividends collected before the stock was called.