YieldBoost MON From 2% To 8.6% Using Options

Shareholders of Monsanto Co (MON) looking to boost their income beyond the stock's 2% annualized dividend yield can sell the January 2018 covered call at the $110 strike and collect the premium based on the $7.65 bid, which annualizes to an additional 6.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.6% annualized rate in the scenario where the stock is not called away. Any upside above $110 would be lost if the stock rises there and is called away, but MON shares would have to advance 4.5% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 11.8% return from this trading level, in addition to any dividends collected before the stock was called.