YieldBoost Citizens & Northern To 57.5% Using Options
March 13, 2024 at 14:10 PM EDT
Shareholders of Citizens & Northern Corp (CZNC) looking to boost their income beyond the stock's 6.3% annualized dividend yield can sell the March covered call at the $30 strike and collect the premium based on the 5 cents bid, which annualizes to an additional 51.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 57.5% annualized rate in the scenario where the stock is not called away. Any upside above $30 would be lost if the stock rises there and is called away, but CZNC shares would have to climb 68.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 68.6% return from this trading level, in addition to any dividends collected before the stock was called.