Strategy To YieldBoost Navient Corp To 24.5% Using Options

Shareholders of Navient Corp (NAVI) looking to boost their income beyond the stock's 7.9% annualized dividend yield can sell the December covered call at the $10 strike and collect the premium based on the 55 cents bid, which annualizes to an additional 16.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 24.5% annualized rate in the scenario where the stock is not called away. Any upside above $10 would be lost if the stock rises there and is called away, but NAVI shares would have to climb 21.9% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 28.7% return from this trading level, in addition to any dividends collected before the stock was called.