Strategy To YieldBoost Myers Industries To 15% Using Options

Shareholders of Myers Industries Inc. ( MYE) looking to boost their income beyond the stock's 2.7% annualized dividend yield can sell the December covered call at the $20 strike and collect the premium based on the 65 cents bid, which annualizes to an additional 12.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15% 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 MYE shares would have to advance 5.2% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 8.6% return from this trading level, in addition to any dividends collected before the stock was called.

START SLIDESHOW:
Top YieldBoost Calls of the S&P 500 »

In general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Myers Industries Inc., looking at the dividend history chart for MYE below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 2.7% annualized dividend yield.

MYE+Dividend+History+Chart

Below is a chart showing MYE's trailing twelve month trading history, with the $20 strike highlighted in red:

Loading+chart++2014+TickerTech.com

The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the December covered call at the $20 strike gives good reward for the risk of having given away the upside beyond $20. ( Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for Myers Industries Inc. (considering the last 252 trading day closing values as well as today's price of $19.08) to be 32%. For other call options contract ideas at the various different available expirations, visit the MYE Stock Options page of StockOptionsChannel.com.

If you liked this article you might like

Insider Trading Alert - MYRG, MYE And TIPT Traded By Insiders

Insider Trading Alert - MYRG, MYE And TIPT Traded By Insiders

Insider Trading Alert - NSR, MYE And TIPT Traded By Insiders

Insider Trading Alert - NSR, MYE And TIPT Traded By Insiders

Insider Trading Alert - CYRX, ACSF And MYE Traded By Insiders

Insider Trading Alert - CYRX, ACSF And MYE Traded By Insiders

Insider Trading Alert - YORW, HSY And MYE Traded By Insiders

Insider Trading Alert - YORW, HSY And MYE Traded By Insiders

Insider Trading Alert - YORW, HSY And MYE Traded By Insiders

Insider Trading Alert - YORW, HSY And MYE Traded By Insiders