Strategy To YieldBoost Strategic Education From 2.2% To 15.3% Using Options

Shareholders of Strategic Education Inc (STRA) looking to boost their income beyond the stock's 2.2% annualized dividend yield can sell the November covered call at the $120 strike and collect the premium based on the $5.10 bid, which annualizes to an additional 13.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15.3% annualized rate in the scenario where the stock is not called away. Any upside above $120 would be lost if the stock rises there and is called away, but STRA shares would have to climb 7.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12% return from this trading level, in addition to any dividends collected before the stock was called.