Strategy To YieldBoost Independent Bank Corp From 2.2% To 47.1% Using Options

Shareholders of Independent Bank Corp (INDB) looking to boost their income beyond the stock's 2.2% annualized dividend yield can sell the January covered call at the $85 strike and collect the premium based on the 10 cents bid, which annualizes to an additional 44.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 47.1% annualized rate in the scenario where the stock is not called away. Any upside above $85 would be lost if the stock rises there and is called away, but INDB shares would have to climb 4.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 4.7% return from this trading level, in addition to any dividends collected before the stock was called.