YieldBoost NYMT To 34.5% Using Options

Shareholders of New York Mortgage Trust Inc (NYMT) looking to boost their income beyond the stock's 13% annualized dividend yield can sell the May covered call at the $7.50 strike and collect the premium based on the 5 cents bid, which annualizes to an additional 21.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 34.5% annualized rate in the scenario where the stock is not called away. Any upside above $7.50 would be lost if the stock rises there and is called away, but NYMT shares would have to advance 23.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 24.2% return from this trading level, in addition to any dividends collected before the stock was called.