YieldBoost Knoll To 27% Using Options

Shareholders of Knoll Inc (KNL) looking to boost their income beyond the stock's 3.1% annualized dividend yield can sell the February covered call at the $20 strike and collect the premium based on the 35 cents bid, which annualizes to an additional 23.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 27% annualized rate in the scenario where the stock is not called away. Any upside above $20 would be lost if the stock rises there and is called away, but KNL shares would have to advance 4.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 6.5% return from this trading level, in addition to any dividends collected before the stock was called.