YieldBoost GTN From 4.8% To 21% Using Options

Shareholders of Gray Television Inc (GTN) looking to boost their income beyond the stock's 4.8% annualized dividend yield can sell the August covered call at the $7.50 strike and collect the premium based on the 30 cents bid, which annualizes to an additional 16.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 21% annualized rate in the scenario where the stock is not called away. Any upside above $7.50 would be lost if the stock rises there and is called away, but GTN shares would have to advance 13.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 17.8% return from this trading level, in addition to any dividends collected before the stock was called.