Strategy To YieldBoost Cricut To 14.6% Using Options

Shareholders of Cricut Inc (CRCT) looking to boost their income beyond the stock's 3.5% annualized dividend yield can sell the September covered call at the $7.50 strike and collect the premium based on the 35 cents bid, which annualizes to an additional 11.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 14.6% annualized rate in the scenario where the stock is not called away. Any upside above $7.50 would be lost if the stock rises there and is called away, but CRCT shares would have to advance 33% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 39.2% return from this trading level, in addition to any dividends collected before the stock was called.