Strategy To YieldBoost Sinclair To 33% Using Options

Shareholders of Sinclair Inc (SBGI) looking to boost their income beyond the stock's 6.8% annualized dividend yield can sell the June covered call at the $15 strike and collect the premium based on the $1.45 bid, which annualizes to an additional 26.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 33% annualized rate in the scenario where the stock is not called away. Any upside above $15 would be lost if the stock rises there and is called away, but SBGI shares would have to climb 1.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 11.6% return from this trading level, in addition to any dividends collected before the stock was called.