Strategy To YieldBoost JBT Marel To 17.8% Using Options

Shareholders of JBT Marel Corp (JBTM) looking to boost their income beyond the stock's 0.3% annualized dividend yield can sell the May covered call at the $135 strike and collect the premium based on the $6.10 bid, which annualizes to an additional 17.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 17.8% annualized rate in the scenario where the stock is not called away. Any upside above $135 would be lost if the stock rises there and is called away, but JBTM shares would have to advance 5.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10.6% return from this trading level, in addition to any dividends collected before the stock was called.