YieldBoost Mattel To 19.6% Using Options

Shareholders of Mattel Inc (MAT) looking to boost their income beyond the stock's 5.7% annualized dividend yield can sell the October covered call at the $27 strike and collect the premium based on the $1.15 bid, which annualizes to an additional 13.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 19.6% annualized rate in the scenario where the stock is not called away. Any upside above $27 would be lost if the stock rises there and is called away, but MAT shares would have to climb 1.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 5.6% return from this trading level, in addition to any dividends collected before the stock was called.