How To YieldBoost SWBI From 3.8% To 8.8% Using Options

Shareholders of Smith & Wesson Brands Inc (SWBI) looking to boost their income beyond the stock's 3.8% annualized dividend yield can sell the January 2027 covered call at the $20 strike and collect the premium based on the $1.45 bid, which annualizes to an additional 4.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.8% annualized rate in the scenario where the stock is not called away. Any upside above $20 would be lost if the stock rises there and is called away, but SWBI shares would have to climb 47.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 58.3% return from this trading level, in addition to any dividends collected before the stock was called.