Shareholders of Monro Muffler Brake, Inc. (MNRO) looking to boost their income beyond the stock's 0.9% annualized dividend yield can sell the April 2014 covered call at the $50 strike and collect the premium based on the $2.45 bid, which annualizes to an additional 11.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.4% annualized rate in the scenario where the stock is not called away. Any upside above $50 would be lost if the stock rises there and is called away, but MNRO shares would have to advance 4.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.2% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost Monro Muffler Brake To 12.4% Using Options
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