YieldBoost AGL Resources To 4.7% Using Options

Shareholders of AGL Resources (NYSE: GAS) looking to boost their income beyond the stock’s 4% annualized dividend yield can sell the April 2014 covered call at the $50 strike and collect the premium based on the 10 cents bid, which annualizes to an additional 0.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.7% annualized rate in the scenario where the stock is not called away. Any upside above $50 would be lost if the stock rises there and is called away, but GAS shares would have to advance 6.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 6.7% return from this trading level, in addition to any dividends collected before the stock was called.

http://www.forbes.com/sites/stockoptionschannel/2013/12/24/yieldboost-agl-resources-to-4-7-using-options/