YieldBoost Apogee Enterprises From 1.1% To 7.9% Using Options
December 07, 2017 at 11:47 AM EST
Shareholders of Apogee Enterprises Inc (APOG) looking to boost their income beyond the stock's 1.1% annualized dividend yield can sell the May 2018 covered call at the $55 strike and collect the premium based on the $1.45 bid, which annualizes to an additional 6.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.9% annualized rate in the scenario where the stock is not called away. Any upside above $55 would be lost if the stock rises there and is called away, but APOG shares would have to advance 13.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 16.1% return from this trading level, in addition to any dividends collected before the stock was called.