YieldBoost Amcor To 7.4% Using Options
November 14, 2024 at 12:31 PM EST
Shareholders of Amcor plc (AMCR) looking to boost their income beyond the stock's 5% annualized dividend yield can sell the April 2025 covered call at the $11 strike and collect the premium based on the 10 cents bid, which annualizes to an additional 2.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.4% annualized rate in the scenario where the stock is not called away. Any upside above $11 would be lost if the stock rises there and is called away, but AMCR shares would have to climb 9.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10.1% return from this trading level, in addition to any dividends collected before the stock was called.