How To YieldBoost HEES To 23.2% Using Options

Shareholders of H&E Equipment Services Inc (HEES) looking to boost their income beyond the stock's 6.5% annualized dividend yield can sell the November covered call at the $17.50 strike and collect the premium based on the 85 cents bid, which annualizes to an additional 16.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 23.2% annualized rate in the scenario where the stock is not called away. Any upside above $17.50 would be lost if the stock rises there and is called away, but HEES shares would have to advance 12.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 18.2% return from this trading level, in addition to any dividends collected before the stock was called.