YieldBoost Marten Transport From 0.6% To 12.7% Using Options

Shareholders of Marten Transport Ltd (MRTN) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the June 2020 covered call at the $22.50 strike and collect the premium based on the $1.35 bid, which annualizes to an additional 12.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.7% annualized rate in the scenario where the stock is not called away. Any upside above $22.50 would be lost if the stock rises there and is called away, but MRTN shares would have to advance 4.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 11.2% return from this trading level, in addition to any dividends collected before the stock was called.
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