YieldBoost JMSB From 1.3% To 10.9% Using Options
August 21, 2024 at 11:40 AM EDT
Shareholders of John Marshall Bancorp Inc (JMSB) looking to boost their income beyond the stock's 1.3% annualized dividend yield can sell the March 2025 covered call at the $22.50 strike and collect the premium based on the $1.05 bid, which annualizes to an additional 9.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.9% annualized rate in the scenario where the stock is not called away. Any upside above $22.50 would be lost if the stock rises there and is called away, but JMSB shares would have to climb 19% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 24.5% return from this trading level, in addition to any dividends collected before the stock was called.