How To YieldBoost iRadimed From 1.4% To 13.6% Using Options
June 05, 2024 at 11:37 AM EDT
Shareholders of iRadimed Corp (IRMD) looking to boost their income beyond the stock's 1.4% annualized dividend yield can sell the October covered call at the $50 strike and collect the premium based on the $1.90 bid, which annualizes to an additional 12.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.6% annualized rate in the scenario where the stock is not called away. Any upside above $50 would be lost if the stock rises there and is called away, but IRMD shares would have to advance 18.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 23.2% return from this trading level, in addition to any dividends collected before the stock was called.