Strategy To YieldBoost MA From 0.8% To 4.7% Using Options

Shareholders of MasterCard Inc (MA) looking to boost their income beyond the stock's 0.8% annualized dividend yield can sell the January 2018 covered call at the $110 strike and collect the premium based on the $6.20 bid, which annualizes to an additional 3.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.7% 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 MA shares would have to advance 13.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 20.2% return from this trading level, in addition to any dividends collected before the stock was called.