How To YieldBoost LIN To 3.4% Using Options
July 10, 2024 at 11:46 AM EDT
Shareholders of Linde PLC (LIN) looking to boost their income beyond the stock's 1.3% annualized dividend yield can sell the January 2026 covered call at the $540 strike and collect the premium based on the $13.80 bid, which annualizes to an additional 2.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 3.4% annualized rate in the scenario where the stock is not called away. Any upside above $540 would be lost if the stock rises there and is called away, but LIN shares would have to advance 25.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 28.3% return from this trading level, in addition to any dividends collected before the stock was called.