How To YieldBoost Materion Corp To 7% Using Options

Shareholders of Materion Corp (MTRN) looking to boost their income beyond the stock's 0.8% annualized dividend yield can sell the June 2018 covered call at the $55 strike and collect the premium based on the $1.85 bid, which annualizes to an additional 6.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 7% annualized rate in the scenario where the stock is not called away. Any upside above $55 would be lost if the stock rises there and is called away, but MTRN shares would have to advance 10.9% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 14.6% return from this trading level, in addition to any dividends collected before the stock was called.