How To YieldBoost LYB From 4.2% To 15.7% Using Options

Shareholders of LyondellBasell Industries NV (LYB) looking to boost their income beyond the stock's 4.2% annualized dividend yield can sell the January 2017 covered call at the $82.50 strike and collect the premium based on the $6.10 bid, which annualizes to an additional 11.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 15.7% annualized rate in the scenario where the stock is not called away. Any upside above $82.50 would be lost if the stock rises there and is called away, but LYB shares would have to advance 2.7% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10.3% return from this trading level, in addition to any dividends collected before the stock was called.