How To YieldBoost CMRE From 2.8% To 15.5% Using Options
July 02, 2024 at 12:24 PM EDT
Shareholders of Costamare Inc (CMRE) looking to boost their income beyond the stock's 2.8% annualized dividend yield can sell the December covered call at the $18 strike and collect the premium based on the $1.00 bid, which annualizes to an additional 12.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15.5% annualized rate in the scenario where the stock is not called away. Any upside above $18 would be lost if the stock rises there and is called away, but CMRE shares would have to climb 7.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 13.7% return from this trading level, in addition to any dividends collected before the stock was called.