Strategy To YieldBoost ANDE To 21.2% Using Options

Shareholders of Andersons Inc (ANDE) looking to boost their income beyond the stock's 3.9% annualized dividend yield can sell the March 2021 covered call at the $20 strike and collect the premium based on the $1.80 bid, which annualizes to an additional 17.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 21.2% annualized rate in the scenario where the stock is not called away. Any upside above $20 would be lost if the stock rises there and is called away, but ANDE shares would have to climb 12.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 22.8% return from this trading level, in addition to any dividends collected before the stock was called.
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