YieldBoost Genie Energy To 12.5% Using Options

Shareholders of Genie Energy Ltd (GNE) looking to boost their income beyond the stock's 2% annualized dividend yield can sell the December covered call at the $17.50 strike and collect the premium based on the 75 cents bid, which annualizes to an additional 10.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.5% 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 GNE shares would have to climb 15.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 20.1% return from this trading level, in addition to any dividends collected before the stock was called.