How To YieldBoost Artisan Partners Asset Management From 4% To 11.3% Using Options

Shareholders of Artisan Partners Asset Management Inc (APAM) looking to boost their income beyond the stock's 4% annualized dividend yield can sell the March 2015 covered call at the $60 strike and collect the premium based on the $2.35 bid, which annualizes to an additional 7.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.3% annualized rate in the scenario where the stock is not called away. Any upside above $60 would be lost if the stock rises there and is called away, but APAM shares would have to climb 10.2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 14.5% return from this trading level, in addition to any dividends collected before the stock was called.