YieldBoost HPP To 48.2% Using Options

Shareholders of Hudson Pacific Properties Inc (HPP) looking to boost their income beyond the stock's 4.1% annualized dividend yield can sell the September covered call at the $5 strike and collect the premium based on the 20 cents bid, which annualizes to an additional 44.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 48.2% annualized rate in the scenario where the stock is not called away. Any upside above $5 would be lost if the stock rises there and is called away, but HPP shares would have to advance 5.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.9% return from this trading level, in addition to any dividends collected before the stock was called.