Shareholders of Extra Space Storage Inc (EXR) looking to boost their income beyond the stock's 4.6% annualized dividend yield can sell the December covered call at the $150 strike and collect the premium based on the $3.60 bid, which annualizes to an additional 10% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 14.6% annualized rate in the scenario where the stock is not called away. Any upside above $150 would be lost if the stock rises there and is called away, but EXR shares would have to climb 5.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 7.8% return from this trading level, in addition to any dividends collected before the stock was called.

Read full article here »