YieldBoost AZZ To 29.4% Using Options

Shareholders of AZZ Inc (AZZ) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the October covered call at the $60 strike and collect the premium based on the 30 cents bid, which annualizes to an additional 28.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 29.4% annualized rate in the scenario where the stock is not called away. Any upside above $60 would be lost if the stock rises there and is called away, but AZZ shares would have to climb 8.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8.7% return from this trading level, in addition to any dividends collected before the stock was called.
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