YieldBoost Burford Capital From 1% To 13.5% Using Options
October 07, 2024 at 13:24 PM EDT
Shareholders of Burford Capital Limited Ordinary Shares (BUR) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the June 2025 covered call at the $15 strike and collect the premium based on the $1.15 bid, which annualizes to an additional 12.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.5% annualized rate in the scenario where the stock is not called away. Any upside above $15 would be lost if the stock rises there and is called away, but BUR shares would have to advance 15% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 23.9% return from this trading level, in addition to any dividends collected before the stock was called.