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September 01, 2020 10:10am
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YieldBoost Solaris Oilfield Infrastructure From 5.6% To 16.5% Using Options

Shareholders of Solaris Oilfield Infrastructure Inc (SOI) looking to boost their income beyond the stock's 5.6% annualized dividend yield can sell the November covered call at the $10 strike and collect the premium based on the 60 cents 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 16.5% annualized rate in the scenario where the stock is not called away. Any upside above $10 would be lost if the stock rises there and is called away, but SOI shares would have to climb 16.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 23.5% return from this trading level, in addition to any dividends collected before the stock was called.
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