Strategy To YieldBoost Hope Bancorp To 262.2% Using Options

Shareholders of Hope Bancorp Inc (HOPE) looking to boost their income beyond the stock's 5% annualized dividend yield can sell the March covered call at the $12.50 strike and collect the premium based on the 70 cents bid, which annualizes to an additional 257.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 262.2% annualized rate in the scenario where the stock is not called away. Any upside above $12.50 would be lost if the stock rises there and is called away, but HOPE shares would have to climb 12.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 19% return from this trading level, in addition to any dividends collected before the stock was called.