YieldBoost DineEquity To 21.5% Using Options

Shareholders of DineEquity Inc (DIN) looking to boost their income beyond the stock's 3.9% annualized dividend yield can sell the August covered call at the $80 strike and collect the premium based on the 85 cents bid, which annualizes to an additional 17.6% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 21.5% annualized rate in the scenario where the stock is not called away. Any upside above $80 would be lost if the stock rises there and is called away, but DIN shares would have to advance 4.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 5.5% return from this trading level, in addition to any dividends collected before the stock was called.