Shareholders of Atlantic Power Corp (
AT_) looking to boost their income beyond the stock's 10.6% annualized dividend
yield can sell the April 2014 covered call at the $5 strike and collect the premium based on the 10 cents bid, which annualizes to an additional 6.4% 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 $5 would be lost if the stock rises there and is called away, but AT shares would have to climb 32.6% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 35.3% return from this trading level, in addition to any dividends collected before the stock was called.