Shareholders of Manitowoc Co., Inc. (MTW) looking to boost their income beyond the stock's 0.3% annualized dividend yield can sell the January 2016 covered call at the $45 strike and collect the premium based on the $1.95 bid, which annualizes to an additional 3.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 3.9% annualized rate in the scenario where the stock is not called away. Any upside above $45 would be lost if the stock rises there and is called away, but MTW shares would have to climb 45.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 52% return from this trading level, in addition to any dividends collected before the stock was called.
How To YieldBoost Manitowoc From 0.3% To 3.9% Using Options
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