How To YieldBoost MYCC From 2.9% To 10% Using Options
February 12, 2015 at 11:37 AM EST
Shareholders of ClubCorp Holdings Inc (MYCC) looking to boost their income beyond the stock's 2.9% annualized dividend yield can sell the September covered call at the $20 strike and collect the premium based on the 75 cents bid, which annualizes to an additional 7.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10% annualized rate in the scenario where the stock is not called away. Any upside above $20 would be lost if the stock rises there and is called away, but MYCC shares would have to climb 12.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 16.6% return from this trading level, in addition to any dividends collected before the stock was called.