How To YieldBoost Ubiquiti Networks From 0.5% To 29.4% Using Options

Shareholders of Ubiquiti Networks Inc (UBNT) looking to boost their income beyond the stock's 0.5% annualized dividend yield can sell the March 2015 covered call at the $36 strike and collect the premium based on the $4.00 bid, which annualizes to an additional 28.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 29.4% annualized rate in the scenario where the stock is not called away. Any upside above $36 would be lost if the stock rises there and is called away, but UBNT shares would have to advance 4.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 16.2% return from this trading level, in addition to any dividends collected before the stock was called.