How To YieldBoost HST From 4.3% To 18.3% Using Options

Shareholders of Host Hotels & Resorts Inc (HST) looking to boost their income beyond the stock's 4.3% annualized dividend yield can sell the October covered call at the $19 strike and collect the premium based on the 65 cents bid, which annualizes to an additional 14% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 18.3% annualized rate in the scenario where the stock is not called away. Any upside above $19 would be lost if the stock rises there and is called away, but HST shares would have to climb 3.1% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 6.7% return from this trading level, in addition to any dividends collected before the stock was called.