Strategy To YieldBoost JBL To 11.7% Using Options
September 11, 2024 at 12:44 PM EDT
Shareholders of Jabil Inc (JBL) looking to boost their income beyond the stock's 0.3% annualized dividend yield can sell the June 2025 covered call at the $115 strike and collect the premium based on the $8.80 bid, which annualizes to an additional 11.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.7% annualized rate in the scenario where the stock is not called away. Any upside above $115 would be lost if the stock rises there and is called away, but JBL shares would have to climb 14.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 23.6% return from this trading level, in addition to any dividends collected before the stock was called.