YieldBoost FFWM To 11.1% Using Options

Shareholders of First Foundation Inc (FFWM) looking to boost their income beyond the stock's 0.7% annualized dividend yield can sell the January 2025 covered call at the $7.50 strike and collect the premium based on the 35 cents bid, which annualizes to an additional 10.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.1% annualized rate in the scenario where the stock is not called away. Any upside above $7.50 would be lost if the stock rises there and is called away, but FFWM shares would have to advance 29.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 35.8% return from this trading level, in addition to any dividends collected before the stock was called.