YieldBoost Pactiv Evergreen From 3% To 51.1% Using Options
May 03, 2024 at 11:29 AM EDT
Shareholders of Pactiv Evergreen Inc (PTVE) looking to boost their income beyond the stock's 3% annualized dividend yield can sell the May covered call at the $17.50 strike and collect the premium based on the 25 cents bid, which annualizes to an additional 48% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 51.1% annualized rate in the scenario where the stock is not called away. Any upside above $17.50 would be lost if the stock rises there and is called away, but PTVE shares would have to advance 29% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 30.8% return from this trading level, in addition to any dividends collected before the stock was called.