YieldBoost Evergy From 4.9% To 11.5% Using Options
June 14, 2024 at 11:34 AM EDT
Shareholders of Evergy Inc (EVRG) looking to boost their income beyond the stock's 4.9% annualized dividend yield can sell the December covered call at the $55 strike and collect the premium based on the $1.80 bid, which annualizes to an additional 6.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.5% annualized rate in the scenario where the stock is not called away. Any upside above $55 would be lost if the stock rises there and is called away, but EVRG shares would have to climb 4.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 7.9% return from this trading level, in addition to any dividends collected before the stock was called.