How To YieldBoost Regal Rexnord From 1% To 11.9% Using Options

Shareholders of Regal Rexnord Corp (RRX) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the November covered call at the $155 strike and collect the premium based on the $6.70 bid, which annualizes to an additional 10.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.9% annualized rate in the scenario where the stock is not called away. Any upside above $155 would be lost if the stock rises there and is called away, but RRX shares would have to climb 12% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 16.8% return from this trading level, in addition to any dividends collected before the stock was called.