Strategy To YieldBoost MATX From 1.8% To 12.6% Using Options

Shareholders of Matson Inc (MATX) looking to boost their income beyond the stock's 1.8% annualized dividend yield can sell the June covered call at the $40 strike and collect the premium based on the $1.40 bid, which annualizes to an additional 10.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.6% 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 MATX shares would have to climb 6.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10.7% return from this trading level, in addition to any dividends collected before the stock was called.