YieldBoost CMC Materials To 13.8% Using Options

Shareholders of CMC Materials Inc (CCMP) looking to boost their income beyond the stock's 1.3% annualized dividend yield can sell the December 2022 covered call at the $150 strike and collect the premium based on the $18.50 bid, which annualizes to an additional 12.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.8% annualized rate in the scenario where the stock is not called away. Any upside above $150 would be lost if the stock rises there and is called away, but CCMP shares would have to climb 7.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 21.1% return from this trading level, in addition to any dividends collected before the stock was called.