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YieldBoost IDT Corp From 1.7% To 14.8% Using Options

Shareholders of IDT Corp (IDT) looking to boost their income beyond the stock's 1.7% annualized dividend yield can sell the June 2018 covered call at the $13 strike and collect the premium based on the 75 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 14.8% annualized rate in the scenario where the stock is not called away. Any upside above $13 would be lost if the stock rises there and is called away, but IDT shares would have to advance 15.3% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 22% return from this trading level, in addition to any dividends collected before the stock was called.
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