How To YieldBoost Bank of Marin Bancorp To 66.9% Using Options

Shareholders of Bank of Marin Bancorp (BMRC) looking to boost their income beyond the stock's 6.6% annualized dividend yield can sell the April covered call at the $22.50 strike and collect the premium based on the 5 cents bid, which annualizes to an additional 60.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 66.9% annualized rate in the scenario where the stock is not called away. Any upside above $22.50 would be lost if the stock rises there and is called away, but BMRC shares would have to climb 48.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 49% return from this trading level, in addition to any dividends collected before the stock was called.