YieldBoost TGLS From 0.6% To 10.6% Using Options
October 04, 2024 at 11:42 AM EDT
Shareholders of Tecnoglass Inc (TGLS) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the October 2025 covered call at the $80 strike and collect the premium based on the $7.10 bid, which annualizes to an additional 9.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.6% annualized rate in the scenario where the stock is not called away. Any upside above $80 would be lost if the stock rises there and is called away, but TGLS shares would have to advance 15.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 26% return from this trading level, in addition to any dividends collected before the stock was called.