Strategy To YieldBoost FTAI Infrastructure To 14.7% Using Options
May 01, 2024 at 11:47 AM EDT
Shareholders of FTAI Infrastructure Inc (FIP) looking to boost their income beyond the stock's 1.7% annualized dividend yield can sell the December covered call at the $9 strike and collect the premium based on the 60 cents bid, which annualizes to an additional 13.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 14.7% annualized rate in the scenario where the stock is not called away. Any upside above $9 would be lost if the stock rises there and is called away, but FIP shares would have to climb 25% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 33.3% return from this trading level, in addition to any dividends collected before the stock was called.