YieldBoost NX From 1.4% To 13.3% Using Options

Shareholders of Quanex Building Products Corp (NX) looking to boost their income beyond the stock's 1.4% annualized dividend yield can sell the March 2022 covered call at the $25 strike and collect the premium based on the 90 cents bid, which annualizes to an additional 11.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.3% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but NX shares would have to climb 10.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 14.8% return from this trading level, in addition to any dividends collected before the stock was called.