Strategy To YieldBoost Bank of New York Mellon From 2.9% To 10% Using Options

Shareholders of Bank of New York Mellon Corp (BK) looking to boost their income beyond the stock's 2.9% annualized dividend yield can sell the June 2025 covered call at the $62.50 strike and collect the premium based on the $4.30 bid, which annualizes to an additional 7.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10% annualized rate in the scenario where the stock is not called away. Any upside above $62.50 would be lost if the stock rises there and is called away, but BK shares would have to climb 6.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 13.5% return from this trading level, in addition to any dividends collected before the stock was called.