YieldBoost MOS To 4.3% Using Options

Shareholders of Mosaic Co (MOS) looking to boost their income beyond the stock's 2% annualized dividend yield can sell the January 2016 covered call at the $60 strike and collect the premium based on the $1.65 bid, which annualizes to an additional 2.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.3% annualized rate in the scenario where the stock is not called away. Any upside above $60 would be lost if the stock rises there and is called away, but MOS shares would have to advance 22.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 26.2% return from this trading level, in addition to any dividends collected before the stock was called.
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