How To YieldBoost Amcor From 4.6% To 18.8% Using Options
August 15, 2024 at 11:37 AM EDT
Shareholders of Amcor plc (AMCR) looking to boost their income beyond the stock's 4.6% annualized dividend yield can sell the September covered call at the $11 strike and collect the premium based on the 15 cents bid, which annualizes to an additional 14.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 18.8% annualized rate in the scenario where the stock is not called away. Any upside above $11 would be lost if the stock rises there and is called away, but AMCR shares would have to advance 2.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 3.6% return from this trading level, in addition to any dividends collected before the stock was called.