YieldBoost Lexington Realty Trust From 3.1% To 21.8% Using Options

Shareholders of Lexington Realty Trust (LXP) looking to boost their income beyond the stock's 3.1% annualized dividend yield can sell the October covered call at the $15 strike and collect the premium based on the 5 cents bid, which annualizes to an additional 18.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 21.8% annualized rate in the scenario where the stock is not called away. Any upside above $15 would be lost if the stock rises there and is called away, but LXP shares would have to advance 7.8% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8.1% return from this trading level, in addition to any dividends collected before the stock was called.