YieldBoost Luxfer Holdings From 4.6% To 18.9% Using Options

Shareholders of Luxfer Holdings plc (LXFR) looking to boost their income beyond the stock's 4.6% annualized dividend yield can sell the October covered call at the $12.50 strike and collect the premium based on the 60 cents bid, which annualizes to an additional 14.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 18.9% annualized rate in the scenario where the stock is not called away. Any upside above $12.50 would be lost if the stock rises there and is called away, but LXFR shares would have to advance 8.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 14% return from this trading level, in addition to any dividends collected before the stock was called.