How To YieldBoost LKQ To 10% Using Options

Shareholders of LKQ Corp (LKQ) looking to boost their income beyond the stock's 3.3% annualized dividend yield can sell the May 2025 covered call at the $42.50 strike and collect the premium based on the $1.00 bid, which annualizes to an additional 6.8% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 10% annualized rate in the scenario where the stock is not called away. Any upside above $42.50 would be lost if the stock rises there and is called away, but LKQ shares would have to climb 16.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 19.2% return from this trading level, in addition to any dividends collected before the stock was called.