YieldBoost SPNS From 1.1% To 18.1% Using Options
October 28, 2021 at 11:50 AM EDT
Shareholders of Sapiens International Corp NV (SPNS) looking to boost their income beyond the stock's 1.1% annualized dividend yield can sell the April 2022 covered call at the $35 strike and collect the premium based on the $2.70 bid, which annualizes to an additional 17% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 18.1% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but SPNS shares would have to advance 1.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.4% return from this trading level, in addition to any dividends collected before the stock was called.