YieldBoost Universal Insurance Holdings To 23.9% Using Options

Shareholders of Universal Insurance Holdings Inc (UVE) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the August covered call at the $25 strike and collect the premium based on the $2.30 bid, which annualizes to an additional 22.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 23.9% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but UVE shares would have to advance 0.4% from current levels for that to happen, 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.