YieldBoost TROX To 20.4% Using Options
June 27, 2024 at 11:45 AM EDT
Shareholders of Tronox Holdings PLC (TROX) looking to boost their income beyond the stock's 3.2% annualized dividend yield can sell the November covered call at the $17 strike and collect the premium based on the $1.05 bid, which annualizes to an additional 17.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 20.4% annualized rate in the scenario where the stock is not called away. Any upside above $17 would be lost if the stock rises there and is called away, but TROX shares would have to advance 7.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 14.2% return from this trading level, in addition to any dividends collected before the stock was called.