How To YieldBoost EXR To 13% Using Options

Shareholders of Extra Space Storage Inc (EXR) looking to boost their income beyond the stock's 4% annualized dividend yield can sell the September covered call at the $80 strike and collect the premium based on the $2.80 bid, which annualizes to an additional 9.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13% annualized rate in the scenario where the stock is not called away. Any upside above $80 would be lost if the stock rises there and is called away, but EXR shares would have to advance 1.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 4.9% return from this trading level, in addition to any dividends collected before the stock was called.