How To YieldBoost Mid-America Apartment Communities From 3.6% To 7% Using Options

Shareholders of Mid-America Apartment Communities Inc (MAA) looking to boost their income beyond the stock's 3.6% annualized dividend yield can sell the March 2019 covered call at the $110 strike and collect the premium based on the $1.70 bid, which annualizes to an additional 3.4% 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 $110 would be lost if the stock rises there and is called away, but MAA shares would have to climb 7.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9% return from this trading level, in addition to any dividends collected before the stock was called.