YieldBoost ENS From 1% To 13.1% Using Options

Shareholders of Enersys (ENS) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the June covered call at the $75 strike and collect the premium based on the 25 cents bid, which annualizes to an additional 12% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13.1% annualized rate in the scenario where the stock is not called away. Any upside above $75 would be lost if the stock rises there and is called away, but ENS shares would have to advance 8.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9.2% return from this trading level, in addition to any dividends collected before the stock was called.