How To YieldBoost Acuity Brands To 16.6% 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 February 2019 covered call at the $175 strike and collect the premium based on the $10.80 bid, which annualizes to an additional 16.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 16.6% annualized rate in the scenario where the stock is not called away. Any upside above $175 would be lost if the stock rises there and is called away, but AYI shares would have to advance 6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 12.5% return from this trading level, in addition to any dividends collected before the stock was called.