YieldBoost Snyder's-Lance To 10.6% Using Options

Shareholders of Snyder's-Lance Inc (LNCE) looking to boost their income beyond the stock's 1.8% annualized dividend yield can sell the March 2018 covered call at the $40 strike and collect the premium based on the $1.05 bid, which annualizes to an additional 8.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10.6% annualized rate in the scenario where the stock is not called away. Any upside above $40 would be lost if the stock rises there and is called away, but LNCE shares would have to climb 13% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 15.9% return from this trading level, in addition to any dividends collected before the stock was called.