YieldBoost Caledonia Mining To 18.6% Using Options
March 13, 2024 at 13:52 PM EDT
Shareholders of Caledonia Mining Corporation PLC (CMCL) looking to boost their income beyond the stock's 5.3% annualized dividend yield can sell the September covered call at the $12.50 strike and collect the premium based on the 75 cents bid, which annualizes to an additional 13.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 18.6% 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 CMCL shares would have to advance 16.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 23.5% return from this trading level, in addition to any dividends collected before the stock was called.