How To YieldBoost Bank of Hawaii Corp From 4.8% To 40.3% Using Options
May 22, 2024 at 11:42 AM EDT
Shareholders of Bank of Hawaii Corp (BOH) looking to boost their income beyond the stock's 4.8% annualized dividend yield can sell the July covered call at the $90 strike and collect the premium based on the $3.30 bid, which annualizes to an additional 35.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 40.3% annualized rate in the scenario where the stock is not called away. Any upside above $90 would be lost if the stock rises there and is called away, but BOH shares would have to climb 53.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 59.5% return from this trading level, in addition to any dividends collected before the stock was called.