YieldBoost Matson To 12.4% Using Options
March 31, 2017 at 13:39 PM EDT
Shareholders of Matson Inc (MATX) looking to boost their income beyond the stock's 2.4% annualized dividend yield can sell the September covered call at the $35 strike and collect the premium based on the $1.45 bid, which annualizes to an additional 10% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.4% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but MATX shares would have to advance 11.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 16.1% return from this trading level, in addition to any dividends collected before the stock was called.