Strategy To YieldBoost GL From 1.1% To 15.7% Using Options
July 11, 2024 at 12:39 PM EDT
Shareholders of Globe Life Inc (GL) looking to boost their income beyond the stock's 1.1% annualized dividend yield can sell the November covered call at the $95 strike and collect the premium based on the $4.30 bid, which annualizes to an additional 14.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15.7% annualized rate in the scenario where the stock is not called away. Any upside above $95 would be lost if the stock rises there and is called away, but GL shares would have to climb 11.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 16.9% return from this trading level, in addition to any dividends collected before the stock was called.