How To YieldBoost MWA From 1.1% To 15.3%

Shareholders of Mueller Water Products Inc (MWA) looking to boost their income beyond the stock's 1.1% annualized dividend yield can sell the November covered call at the $7.50 strike and collect the premium based on the 40 cents bid, which annualizes to an additional 14.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15.3% annualized rate in the scenario where the stock is not called away. Any upside above $7.50 would be lost if the stock rises there and is called away, but MWA 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 17.4% return from this trading level, in addition to any dividends collected before the stock was called.