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How To YieldBoost LCI Industries To 44% Using Options

Shareholders of LCI Industries (LCII) looking to boost their income beyond the stock's 3.7% annualized dividend yield can sell the May covered call at the $150 strike and collect the premium based on the 25 cents bid, which annualizes to an additional 40.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 44% annualized rate in the scenario where the stock is not called away. Any upside above $150 would be lost if the stock rises there and is called away, but LCII shares would have to advance 32.4% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 32.6% return from this trading level, in addition to any dividends collected before the stock was called.
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