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September 01, 2020 1:26pm
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YieldBoost WisdomTree From 1% To 33.9% Using Options

Shareholders of WisdomTree Inc (WT) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the December covered call at the $12.50 strike and collect the premium based on the 30 cents bid, which annualizes to an additional 32.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 33.9% annualized rate in the scenario where the stock is not called away. Any upside above $12.50 would be lost if the stock rises there and is called away, but WT shares would have to advance 5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 7.6% return from this trading level, in addition to any dividends collected before the stock was called.
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