Strategy To YieldBoost GBX From 2% To 14.3% Using Options

Shareholders of Greenbrier Companies Inc (GBX) looking to boost their income beyond the stock's 2% annualized dividend yield can sell the November covered call at the $67.50 strike and collect the premium based on the $5.60 bid, which annualizes to an additional 12.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 14.3% annualized rate in the scenario where the stock is not called away. Any upside above $67.50 would be lost if the stock rises there and is called away, but GBX shares would have to climb 14% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 23.4% return from this trading level, in addition to any dividends collected before the stock was called.