Strategy To YieldBoost Meta Financial Group To 8.7% Using Options

Shareholders of Meta Financial Group Inc (CASH) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the June 2020 covered call at the $40 strike and collect the premium based on the $1.45 bid, which annualizes to an additional 8.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 8.7% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but CASH shares would have to climb 14.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 18.3% return from this trading level, in addition to any dividends collected before the stock was called.