Strategy To YieldBoost TECH From 0.4% To 6.4% Using Options

Shareholders of Bio-Techne Corp (TECH) looking to boost their income beyond the stock's 0.4% annualized dividend yield can sell the October covered call at the $90 strike and collect the premium based on the $1.60 bid, which annualizes to an additional 6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.4% annualized rate in the scenario where the stock is not called away. Any upside above $90 would be lost if the stock rises there and is called away, but TECH shares would have to climb 17.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 19.3% return from this trading level, in addition to any dividends collected before the stock was called.