YieldBoost PRIM To 17.2% Using Options

Shareholders of Primoris Services Corp (PRIM) looking to boost their income beyond the stock's 0.5% annualized dividend yield can sell the September covered call at the $50 strike and collect the premium based on the $3.40 bid, which annualizes to an additional 16.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 17.2% annualized rate in the scenario where the stock is not called away. Any upside above $50 would be lost if the stock rises there and is called away, but PRIM shares would have to climb 8.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 15.8% return from this trading level, in addition to any dividends collected before the stock was called.