YieldBoost Service Properties Trust To 8.3% Using Options

Shareholders of Service Properties Trust (SVC) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the December covered call at the $5 strike and collect the premium based on the 15 cents 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 8.3% annualized rate in the scenario where the stock is not called away. Any upside above $5 would be lost if the stock rises there and is called away, but SVC shares would have to advance 87.3% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 92.9% return from this trading level, in addition to any dividends collected before the stock was called.