How To YieldBoost John Bean Technologies From 1.3% To 9% Using Options

Shareholders of John Bean Technologies Corp (JBT) looking to boost their income beyond the stock's 1.3% annualized dividend yield can sell the January 2015 covered call at the $30 strike and collect the premium based on the $1.35 bid, which annualizes to an additional 7.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9% annualized rate in the scenario where the stock is not called away. Any upside above $30 would be lost if the stock rises there and is called away, but JBT shares would have to advance 6.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10.8% return from this trading level, in addition to any dividends collected before the stock was called.