How To YieldBoost The Gap To 11% Using Options

Shareholders of The Gap Inc (GAP) looking to boost their income beyond the stock's 2.7% annualized dividend yield can sell the January 2026 covered call at the $32 strike and collect the premium based on the $2.55 bid, which annualizes to an additional 8.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11% annualized rate in the scenario where the stock is not called away. Any upside above $32 would be lost if the stock rises there and is called away, but GAP shares would have to climb 43.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 55.1% return from this trading level, in addition to any dividends collected before the stock was called.