How To YieldBoost Gray Media To 19.8% Using Options

Shareholders of Gray Media Inc (GTN) looking to boost their income beyond the stock's 7.8% annualized dividend yield can sell the August covered call at the $5 strike and collect the premium based on the 25 cents bid, which annualizes to an additional 11.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 19.8% annualized rate in the scenario where the stock is not called away. Any upside above $5 would be lost if the stock rises there and is called away, but GTN shares would have to advance 21.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 27.7% return from this trading level, in addition to any dividends collected before the stock was called.