How To YieldBoost SPNS To 23.2% Using Options

Shareholders of Sapiens International Corp NV (SPNS) looking to boost their income beyond the stock's 2% annualized dividend yield can sell the November covered call at the $40 strike and collect the premium based on the 5 cents bid, which annualizes to an additional 21.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 23.2% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but SPNS shares would have to climb 39% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 39.2% return from this trading level, in addition to any dividends collected before the stock was called.