YieldBoost American Science & Engineering To 9.8% Using Options

Shareholders of American Science & Engineering Inc (ASEI) looking to boost their income beyond the stock's 2.9% annualized dividend yield can sell the October covered call at the $75 strike and collect the premium based on the $2.60 bid, which annualizes to an additional 6.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.8% annualized rate in the scenario where the stock is not called away. Any upside above $75 would be lost if the stock rises there and is called away, but ASEI shares would have to advance 8.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 12.2% return from this trading level, in addition to any dividends collected before the stock was called.