YieldBoost ONEOK From 5% To 103.5% Using Options
June 12, 2024 at 11:36 AM EDT
Shareholders of ONEOK Inc (OKE) looking to boost their income beyond the stock's 5% annualized dividend yield can sell the July covered call at the $95 strike and collect the premium based on the $8.00 bid, which annualizes to an additional 98.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 103.5% annualized rate in the scenario where the stock is not called away. Any upside above $95 would be lost if the stock rises there and is called away, but OKE shares would have to advance 18.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 28.6% return from this trading level, in addition to any dividends collected before the stock was called.