YieldBoost Houston Wire & Cable From 4.2% To 11.4% Using Options

Shareholders of Houston Wire & Cable (HWCC) looking to boost their income beyond the stock's 4.2% annualized dividend yield can sell the December covered call at the $12.50 strike and collect the premium based on the 45 cents bid, which annualizes to an additional 7.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.4% annualized rate in the scenario where the stock is not called away. Any upside above $12.50 would be lost if the stock rises there and is called away, but HWCC shares would have to climb 9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12.9% return from this trading level, in addition to any dividends collected before the stock was called.