YieldBoost First Foundation From 0.6% To 25.7% Using Options

Shareholders of First Foundation Inc (FFWM) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the July covered call at the $7.50 strike and collect the premium based on the 55 cents bid, which annualizes to an additional 25.1% 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 $7.50 would be lost if the stock rises there and is called away, but FFWM shares would have to climb 13.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 21.6% return from this trading level, in addition to any dividends collected before the stock was called.