YieldBoost Lindsay From 1.2% To 726.1% Using Options
June 13, 2024 at 11:36 AM EDT
Shareholders of Lindsay Corp (LNN) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the June covered call at the $190 strike and collect the premium based on the $18.40 bid, which annualizes to an additional 724.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 726.1% annualized rate in the scenario where the stock is not called away. Any upside above $190 would be lost if the stock rises there and is called away, but LNN shares would have to advance 64.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 80% return from this trading level, in addition to any dividends collected before the stock was called.