Shareholders of Dine Brands Global Inc (DIN) looking to boost their income beyond the stock's 8.8% annualized dividend yield can sell the December covered call at the $25 strike and collect the premium based on the $1.95 bid, which annualizes to an additional 21.4% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 30.1% annualized rate in the scenario where the stock is not called away. Any upside above $25 would be lost if the stock rises there and is called away, but DIN shares would have to advance 7.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 15.6% return from this trading level, in addition to any dividends collected before the stock was called.

Read full article here »