YieldBoost AYI From 0.3% To 10.9% Using Options

Shareholders of Acuity Brands Inc (AYI) looking to boost their income beyond the stock's 0.3% annualized dividend yield can sell the November covered call at the $190 strike and collect the premium based on the $9.70 bid, which annualizes to an additional 10.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.9% annualized rate in the scenario where the stock is not called away. Any upside above $190 would be lost if the stock rises there and is called away, but AYI shares would have to advance 4.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.5% return from this trading level, in addition to any dividends collected before the stock was called.