Strategy To YieldBoost SBA Communications To 12.3% Using Options

Shareholders of SBA Communications Corp (SBAC) looking to boost their income beyond the stock's 2% annualized dividend yield can sell the September covered call at the $210 strike and collect the premium based on the $5.50 bid, which annualizes to an additional 10.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.3% annualized rate in the scenario where the stock is not called away. Any upside above $210 would be lost if the stock rises there and is called away, but SBAC shares would have to advance 6.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.4% return from this trading level, in addition to any dividends collected before the stock was called.