How To YieldBoost ANDE From 1.9% To 20% Using Options

Shareholders of Andersons Inc (ANDE) looking to boost their income beyond the stock's 1.9% annualized dividend yield can sell the March 2022 covered call at the $40 strike and collect the premium based on the $2.15 bid, which annualizes to an additional 18.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but ANDE shares would have to climb 7.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 12.9% return from this trading level, in addition to any dividends collected before the stock was called.
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