For investors in Alliant Energy Corp (Symbol: LNT) seeking to amplify their income from the stock’s 4% annualized dividend yield, leveraging the July covered call at the $50 strike offers an opportunity to accumulate additional premiums. By capitalizing on the $1.65 bid, shareholders can attain an extra 8.3% return against the current stock price, resulting in a total of 12.3% annualized rate with the YieldBoost. The only potential downside would be the loss of any upward movement beyond $50 if the stock is called away. However, for this to occur, LNT shares would need to surge by 3.3% from their existing levels. In the event of the stock being called, the shareholder stands to garner a 6.7% return from this trading level in addition to the dividends already received.
Historical volatility and the stock’s trading history can guide the decision of whether selling the July covered call at the $50 strike offers a favorable risk-reward proposition. By examining the trailing twelve month volatility for Alliant Energy Corp (based on the last 250 trading day closing values and the current price of $48.36), which stands at 20%, investors can weigh the potential rewards against the risk of capping the upside beyond $50. For further insights and call options contract ideas at different expiration dates, investors can refer to the LNT Stock Options page on StockOptionsChannel.com.
The predictability of dividend amounts tends to align with the profitability fluctuations of each company. In the context of Alliant Energy Corp, a review of the dividend history chart for LNT can assist in assessing the likelihood of the continuity of the most recent dividend and whether a 4% annualized dividend yield is a reasonable expectation.
It’s important to bear in mind that dividends are not always guaranteed and may fluctuate in line with the company’s performance. Therefore, it’s crucial for investors to employ appropriate risk management strategies and grasp the trade-offs associated with options trading. To solidify this, the chart below illustrates LNT’s trailing twelve month trading history, with the $50 strike highlighted in red:
