YieldBoost Bgc Group To 11.4% Using Options
November 18, 2024 at 11:39 AM EST
Shareholders of Bgc Group Inc - Class A (BGC) looking to boost their income beyond the stock's 0.8% annualized dividend yield can sell the May 2025 covered call at the $12 strike and collect the premium based on the 55 cents bid, which annualizes to an additional 10.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.4% annualized rate in the scenario where the stock is not called away. Any upside above $12 would be lost if the stock rises there and is called away, but BGC shares would have to climb 13.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 18.9% return from this trading level, in addition to any dividends collected before the stock was called.