YieldBoost Hilton Worldwide Holdings To 4.9% Using Options

Shareholders of Hilton Worldwide Holdings Inc (HLT) looking to boost their income beyond the stock's 0.7% annualized dividend yield can sell the January 2020 covered call at the $95 strike and collect the premium based on the $6.20 bid, which annualizes to an additional 4.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 4.9% annualized rate in the scenario where the stock is not called away. Any upside above $95 would be lost if the stock rises there and is called away, but HLT 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 24.1% return from this trading level, in addition to any dividends collected before the stock was called.