YieldBoost LRCX To 4.9% Using Options
April 05, 2024 at 11:35 AM EDT
Shareholders of Lam Research Corp (LRCX) looking to boost their income beyond the stock's 0.8% annualized dividend yield can sell the January 2026 covered call at the $1480 strike and collect the premium based on the $70.05 bid, which annualizes to an additional 4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.9% annualized rate in the scenario where the stock is not called away. Any upside above $1480 would be lost if the stock rises there and is called away, but LRCX shares would have to advance 51.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 59% return from this trading level, in addition to any dividends collected before the stock was called.