Strategy To YieldBoost Carrier Global Corp From 1.2% To 7.5% Using Options
July 01, 2024 at 12:58 PM EDT
Shareholders of Carrier Global Corp (CARR) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the January 2026 covered call at the $75 strike and collect the premium based on the $6.00 bid, which annualizes to an additional 6.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.5% annualized rate in the scenario where the stock is not called away. Any upside above $75 would be lost if the stock rises there and is called away, but CARR shares would have to climb 20.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 30.4% return from this trading level, in addition to any dividends collected before the stock was called.