Strategy To YieldBoost PKE To 776.4% Using Options
June 12, 2024 at 11:35 AM EDT
Shareholders of Park Aerospace Corp (PKE) looking to boost their income beyond the stock's 3.7% annualized dividend yield can sell the July covered call at the $25 strike and collect the premium based on the $10.70 bid, which annualizes to an additional 772.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 776.4% 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 PKE shares would have to climb 83% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 161.3% return from this trading level, in addition to any dividends collected before the stock was called.