Strategy To YieldBoost Nordic American Tankers From 12.6% To 25.7% Using Options

Shareholders of Nordic American Tankers Ltd (NAT) looking to boost their income beyond the stock's 12.6% annualized dividend yield can sell the January 2025 covered call at the $4 strike and collect the premium based on the 25 cents bid, which annualizes to an additional 13.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 25.7% annualized rate in the scenario where the stock is not called away. Any upside above $4 would be lost if the stock rises there and is called away, but NAT shares would have to climb 6.1% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12.7% return from this trading level, in addition to any dividends collected before the stock was called.