YieldBoost CenterPoint Energy From 3.8% To 11.1% Using Options

Shareholders of CenterPoint Energy, Inc (CNP) looking to boost their income beyond the stock's 3.8% annualized dividend yield can sell the August covered call at the $31 strike and collect the premium based on the 70 cents bid, which annualizes to an additional 7.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 11.1% annualized rate in the scenario where the stock is not called away. Any upside above $31 would be lost if the stock rises there and is called away, but CNP shares would have to advance 1.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 3.5% return from this trading level, in addition to any dividends collected before the stock was called.