How To YieldBoost Evolution Petroleum Corp From 4.3% To 14.9% Using Options

Shareholders of Evolution Petroleum Corp (EPM) looking to boost their income beyond the stock's 4.3% annualized dividend yield can sell the April 2015 covered call at the $10 strike and collect the premium based on the 45 cents 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 14.9% annualized rate in the scenario where the stock is not called away. Any upside above $10 would be lost if the stock rises there and is called away, but EPM shares would have to climb 8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12.9% return from this trading level, in addition to any dividends collected before the stock was called.