YieldBoost MAT From 4.3% To 6.6% Using Options

Shareholders of Mattel Inc (MAT) looking to boost their income beyond the stock's 4.3% annualized dividend yield can sell the January 2016 covered call at the $40 strike and collect the premium based on the $1.20 bid, which annualizes to an additional 2.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.6% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but MAT shares would have to climb 13.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 17.1% return from this trading level, in addition to any dividends collected before the stock was called.