YieldBoost Brooks Automation To 13% Using Options

Shareholders of Brooks Automation Inc (BRKS) looking to boost their income beyond the stock's 3.5% annualized dividend yield can sell the April 2015 covered call at the $12.50 strike and collect the premium based on the 45 cents bid, which annualizes to an additional 9.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 13% annualized rate in the scenario where the stock is not called away. Any upside above $12.50 would be lost if the stock rises there and is called away, but BRKS shares would have to advance 8.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 12.1% return from this trading level, in addition to any dividends collected before the stock was called.