Shareholders of Lincoln National Corp. (LNC) looking to boost their income beyond the stock's 1.2% annualized dividend yield can sell the January 2016 covered call at the $65 strike and collect the premium based on the $3.50 bid, which annualizes to an additional 3.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.5% annualized rate in the scenario where the stock is not called away. Any upside above $65 would be lost if the stock rises there and is called away, but LNC shares would have to advance 25.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 32.5% return from this trading level, in addition to any dividends collected before the stock was called.
YieldBoost Lincoln National Corp. From 1.2% To 4.5% Using Options
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