Shareholders of Insperity Inc (NSP) looking to boost their income beyond the stock's 2.1% annualized dividend yield can sell the January 2014 covered call at the $35 strike and collect the premium based on the 75 cents bid, which annualizes to an additional 5.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7.1% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but NSP shares would have to climb 5.9% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8.2% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost Insperity To 7.1%
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