Strategy To YieldBoost SHEN To 10.8% Using Options

Shareholders of Shenandoah Telecommunications Co (SHEN) looking to boost their income beyond the stock's 0.5% annualized dividend yield can sell the January 2025 covered call at the $20 strike and collect the premium based on the 95 cents bid, which annualizes to an additional 10.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.8% annualized rate in the scenario where the stock is not called away. Any upside above $20 would be lost if the stock rises there and is called away, but SHEN shares would have to advance 10.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 16.1% return from this trading level, in addition to any dividends collected before the stock was called.