How To YieldBoost FRT To 10.8% Using Options

Shareholders of Federal Realty Investment Trust (FRT) looking to boost their income beyond the stock's 3.8% annualized dividend yield can sell the May 2025 covered call at the $120 strike and collect the premium based on the $4.00 bid, which annualizes to an additional 6.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.8% annualized rate in the scenario where the stock is not called away. Any upside above $120 would be lost if the stock rises there and is called away, but FRT shares would have to climb 4.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8.2% return from this trading level, in addition to any dividends collected before the stock was called.