Shareholders of Comfort Systems USA, Inc. (FIX) looking to boost their income beyond the stock's 1.3% annualized dividend yield can sell the October covered call at the $17.50 strike and collect the premium based on the 45 cents bid, which annualizes to an additional 10.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.4% 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 FIX shares would have to climb 9.4% from current levels for that to occur, 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.
Strategy To YieldBoost FIX From 1.3% To 11.4%
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