YieldBoost PETS To 17% Using Options

Shareholders of PetMed Express Inc (PETS) looking to boost their income beyond the stock's 2.1% annualized dividend yield can sell the September covered call at the $40 strike and collect the premium based on the $1.40 bid, which annualizes to an additional 14.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 17% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but PETS shares would have to climb 5.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.6% return from this trading level, in addition to any dividends collected before the stock was called.