YieldBoost REVG To 134.1% Using Options
March 06, 2024 at 11:37 AM EST
Shareholders of REV Group Inc (REVG) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the March covered call at the $22 strike and collect the premium based on the 65 cents bid, which annualizes to an additional 133.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 134.1% annualized rate in the scenario where the stock is not called away. Any upside above $22 would be lost if the stock rises there and is called away, but REVG shares would have to climb 10.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 13.8% return from this trading level, in addition to any dividends collected before the stock was called.