Company: MYI
Filing Date: 2025-09-05
Form Type: 424B3
Source: 0001193125-25-196285
Chunk: 184

Company: BLACKROCK MUNIYIELD QUALITY FUND III, INC.
Filing Date: 2025-09-05
Form: 424B3
Chunk 184
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 regular federal income tax. However, under normal circumstances, MIY does not intend to use Strategic Transactions that give rise to taxable income.

99

Put and Call Options on Securities and Indices. MIY may purchase and
sell put and call options on securities and indices. A put option gives the purchaser of the option the right to sell and the writer the obligation to buy the underlying security at the exercise price during the option period. MIY may also purchase
and sell options on bond indices (“”). Index options are similar to options on securities except that, rather than taking or making delivery of securities underlying the option at a specified price upon exercise, an
index option gives the holder the right to receive cash upon exercise of the option if the level of the bond index upon which the option is based is greater, in the case of a call, or less, in the case of a put, than the exercise price of the
option. The purchase of a put option on a debt security could protect MIY’s holdings in a security or a number of securities against a substantial decline in the market value. A call option gives the purchaser of the option the right to buy
and the seller the obligation to sell the underlying security or index at the exercise price during the option period or for a specified period prior to a fixed date. The purchase of a call option on a security could protect MIY against an increase
in the price of a security that it intended to purchase in the future.

Writing Covered Call Options. MIY is
authorized to write (i.e., sell) covered call options with respect to MIY Municipal Bonds it owns, thereby giving the holder of the option the right to buy the underlying security covered by the option from MIY at the stated exercise price until the
option expires. MIY writes only covered call options, which means that so long as MIY is obligated as the writer of a call option, it will own the underlying securities subject to the option.

MIY receives a premium from writing a call option, which increases MIY’s return on the underlying security in the event
the option expires unexercised or is closed out at a profit. By writing a call, MIY limits its opportunity to profit from an increase in the market value of the underlying security above the exercise price of the option for as long as MIY’s
obligation as a writer continues. Covered call options serve as a partial hedge against a decline in the price of the underlying security. MIY may engage in closing transactions in order