YieldBoost Constellation Energy Corp To 6.3% Using Options
April 09, 2024 at 11:34 AM EDT
Shareholders of Constellation Energy Corp (CEG) looking to boost their income beyond the stock's 0.8% annualized dividend yield can sell the January 2026 covered call at the $250 strike and collect the premium based on the $18.60 bid, which annualizes to an additional 5.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.3% annualized rate in the scenario where the stock is not called away. Any upside above $250 would be lost if the stock rises there and is called away, but CEG shares would have to climb 33.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 43.3% return from this trading level, in addition to any dividends collected before the stock was called.