How To YieldBoost BSY From 0.5% To 10.2% Using Options
October 24, 2024 at 11:51 AM EDT
Shareholders of Bentley Systems Inc (BSY) looking to boost their income beyond the stock's 0.5% annualized dividend yield can sell the May 2025 covered call at the $55 strike and collect the premium based on the $2.65 bid, which annualizes to an additional 9.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.2% annualized rate in the scenario where the stock is not called away. Any upside above $55 would be lost if the stock rises there and is called away, but BSY shares would have to climb 12.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 17.5% return from this trading level, in addition to any dividends collected before the stock was called.