YieldBoost TYPE To 15.9% Using Options

Shareholders of Monotype Imaging Holdings Inc (TYPE) looking to boost their income beyond the stock's 1.9% annualized dividend yield can sell the August covered call at the $25 strike and collect the premium based on the $1.30 bid, which annualizes to an additional 14.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15.9% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but TYPE shares would have to climb 4.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.9% return from this trading level, in addition to any dividends collected before the stock was called.