|Day Low/High||110.71 / 112.76|
|52 Wk Low/High||68.00 / 115.94|
In recent trading, shares of Cabot Microelectronics Corp have crossed above the average analyst 12-month target price of $100.75, changing hands for $102.58/share. When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuation, or, re-adjust their target price to a higher level.
Shareholders of Cabot Microelectronics Corp looking to boost their income beyond the stock's 0.8% annualized dividend yield can sell the July 2018 covered call at the $110 strike and collect the premium based on the $3.80 bid, which annualizes to an additional 6.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.9% annualized rate in the scenario where the stock is not called away. Any upside above $110 would be lost if the stock rises there and is called away, but CCMP shares would have to advance 12.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 16.3% return from this trading level, in addition to any dividends collected before the stock was called.
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