Shareholders of Zimmer Biomet Holdings Inc (ZBH) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the January 2027 covered call at the $110 strike and collect the premium based on the $9.00 bid, which annualizes to an additional 6.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.7% annualized rate in the scenario where the stock is not called away. Any upside above $110 would be lost if the stock rises there and is called away, but ZBH shares would have to advance 9.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 18.8% return from this trading level, in addition to any dividends collected before the stock was called.

Read full article here »