How To YieldBoost Berkshire Hills Bancorp To 13.7% Using Options

Shareholders of Berkshire Hills Bancorp Inc (BHLB) looking to boost their income beyond the stock's 1.7% annualized dividend yield can sell the June 2022 covered call at the $30 strike and collect the premium based on the $2.00 bid, which annualizes to an additional 12% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.7% annualized rate in the scenario where the stock is not called away. Any upside above $30 would be lost if the stock rises there and is called away, but BHLB shares would have to advance 7.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 14.5% return from this trading level, in addition to any dividends collected before the stock was called.
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