YieldBoost Regal Rexnord To 14% Using Options

Shareholders of Regal Rexnord Corp (RRX) looking to boost their income beyond the stock's 0.9% annualized dividend yield can sell the February 2025 covered call at the $170 strike and collect the premium based on the $8.90 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 14% annualized rate in the scenario where the stock is not called away. Any upside above $170 would be lost if the stock rises there and is called away, but RRX shares would have to advance 12.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 18.7% return from this trading level, in addition to any dividends collected before the stock was called.