YieldBoost OPI To 53.4% Using Options
June 05, 2024 at 11:37 AM EDT
Shareholders of Office Properties Income Trust (OPI) looking to boost their income beyond the stock's 1.8% annualized dividend yield can sell the June covered call at the $2.50 strike and collect the premium based on the 5 cents bid, which annualizes to an additional 51.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 53.4% annualized rate in the scenario where the stock is not called away. Any upside above $2.50 would be lost if the stock rises there and is called away, but OPI shares would have to climb 13.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 15.4% return from this trading level, in addition to any dividends collected before the stock was called.