Strategy To YieldBoost Build-A-Bear Workshop To 30.3% Using Options

Shareholders of Build-A-Bear Workshop Inc (BBW) looking to boost their income beyond the stock's 2.1% annualized dividend yield can sell the March 2025 covered call at the $40 strike and collect the premium based on the $3.30 bid, which annualizes to an additional 28.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 30.3% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but BBW shares would have to advance 7.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 16.4% return from this trading level, in addition to any dividends collected before the stock was called.