YieldBoost LPLA To 12.6% Using Options
October 22, 2021 at 12:27 PM EDT
Shareholders of Lpl Financial Holdings Inc (LPLA) looking to boost their income beyond the stock's 0.6% annualized dividend yield can sell the April 2022 covered call at the $185 strike and collect the premium based on the $10.00 bid, which annualizes to an additional 12% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.6% annualized rate in the scenario where the stock is not called away. Any upside above $185 would be lost if the stock rises there and is called away, but LPLA shares would have to advance 6.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 11.9% return from this trading level, in addition to any dividends collected before the stock was called.
