Stock Quote

YieldBoost HCI To 9.4% Using Options

Shareholders of HCI Group Inc (HCI) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the December 2022 covered call at the $145 strike and collect the premium based on the $11.10 bid, which annualizes to an additional 8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.4% annualized rate in the scenario where the stock is not called away. Any upside above $145 would be lost if the stock rises there and is called away, but HCI shares would have to advance 32.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 42.7% return from this trading level, in addition to any dividends collected before the stock was called.
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