How To YieldBoost Eagle Bulk Shipping To 24.8% Using Options

Shareholders of Eagle Bulk Shipping Inc (EGLE) looking to boost their income beyond the stock's 19% annualized dividend yield can sell the June 2022 covered call at the $60 strike and collect the premium based on the $1.50 bid, which annualizes to an additional 5.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 24.8% annualized rate in the scenario where the stock is not called away. Any upside above $60 would be lost if the stock rises there and is called away, but EGLE shares would have to climb 41.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 45.1% return from this trading level, in addition to any dividends collected before the stock was called.