Company: EOI
Filing Date: 2025-01-17
Form Type: N-2ASR
Source: 0001193125-25-008310
Chunk: 43

Company: Eaton Vance Enhanced Equity Income Fund
Filing Date: 2025-01-17
Form: N-2ASR
Chunk 43
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 an exchange or no closing price is available, at the mean between the last bid and asked prices or otherwise at fair value as determined by the Board of the Fund. The transaction costs of buying and selling options consist primarily of commissions (which are imposed in opening, closing, exercise and assignment transactions), but may also include margin and interest costs in particular transactions. The impact of transaction costs on the profitability of a transaction may often be greater for options transactions than for transactions in the underlying securities because these costs are often greater in relation to options premiums than in relation to the prices of underlying securities. Transaction costs may be especially significant in option strategies calling for multiple purchases and sales of options, such as spreads or straddles. Transaction costs may be different for transactions effected in foreign markets than for transactions effected in U.S. markets. Call Options and Covered Call Writing. The Fund follows a principal options strategy known as ‘‘covered call option writing,’’ which is a strategy designed to generate earnings and offset a portion of a market decline in the underlying common stock. The Fund will only write (sell) options on common stocks held in the Fund’s portfolio. It may not sell ‘‘naked’’ call options, i.e., options representing more shares of the stock than are held in the portfolio. The standard contract size for an exchange-listed single-stock option is 100 shares of the common stock. There are four items needed to identify a particular option contract: (1) the underlying security, (2) the expiration month, (3) the exercise (or strike) price and (4) the type (call or put). For example, 20 ABC Corp. January 40 call options provide the right to purchase 2,000 shares of ABC Corp. common stock on or before January 17, 2025 at $40 per share. A call option whose strike price is above the current price of the underlying stock is called ‘‘out-of-the-money,’’a call option whose strike price is equal to the current price of the underlying stock is called ‘‘at-the-money’’and a call option whose strike price is below the current price of the underlying stock is called ‘‘in-the-money.’’ The following is a conceptual example of the returns that may be achieved from a stock-plus-call position, making the following assumptions: ABC common stock trades at $36.36 per share and ABC January 40 call options (10% out-of-the-money)trade at $1.82 per underlying share (5% option premium). This