Strategy To YieldBoost LMNX From 1.5% To 15% Using Options

Shareholders of Luminex Corp (LMNX) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the July covered call at the $25 strike and collect the premium based on the $1.60 bid, which annualizes to an additional 13.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but LMNX shares would have to climb 5.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 12.5% return from this trading level, in addition to any dividends collected before the stock was called.