Strategy To YieldBoost Emerald Expositions Events To 11.7% Using Options

Shareholders of Emerald Expositions Events Inc (EEX) looking to boost their income beyond the stock's 1.4% annualized dividend yield can sell the September covered call at the $22.50 strike and collect the premium based on the 65 cents bid, which annualizes to an additional 10.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.7% annualized rate in the scenario where the stock is not called away. Any upside above $22.50 would be lost if the stock rises there and is called away, but EEX shares would have to advance 10% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 13.2% return from this trading level, in addition to any dividends collected before the stock was called.