How To YieldBoost VRSK From 0.6% To 9.3% Using Options
December 19, 2024 at 11:33 AM EST
Shareholders of Verisk Analytics Inc (VRSK) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the June 2025 covered call at the $290 strike and collect the premium based on the $12.10 bid, which annualizes to an additional 8.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.3% annualized rate in the scenario where the stock is not called away. Any upside above $290 would be lost if the stock rises there and is called away, but VRSK shares would have to advance 5.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.8% return from this trading level, in addition to any dividends collected before the stock was called.