YieldBoost Bloomin' Brands To 16.2% Using Options

Shareholders of Bloomin' Brands Inc (BLMN) looking to boost their income beyond the stock's 8% annualized dividend yield can sell the October covered call at the $15 strike and collect the premium based on the 65 cents bid, which annualizes to an additional 8.2% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 16.2% annualized rate in the scenario where the stock is not called away. Any upside above $15 would be lost if the stock rises there and is called away, but BLMN shares would have to climb 25.6% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 31.1% return from this trading level, in addition to any dividends collected before the stock was called.