YieldBoost Arctic Cat To 20.9% Using Options

Shareholders of Arctic Cat Inc (ACAT) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the September covered call at the $35 strike and collect the premium based on the $1.70 bid, which annualizes to an additional 19.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20.9% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but ACAT shares would have to climb 3.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 8.1% return from this trading level, in addition to any dividends collected before the stock was called.