How To YieldBoost SIGA Technologies From 6.5% To 22.7% Using Options

Shareholders of SIGA Technologies Inc (SIGA) looking to boost their income beyond the stock's 6.5% annualized dividend yield can sell the December covered call at the $12 strike and collect the premium based on the 95 cents bid, which annualizes to an additional 16.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 22.7% annualized rate in the scenario where the stock is not called away. Any upside above $12 would be lost if the stock rises there and is called away, but SIGA shares would have to climb 30% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 40.3% return from this trading level, in addition to any dividends collected before the stock was called.