Financial News

How To YieldBoost SVC To 6.6% 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 2025 covered call at the $5 strike and collect the premium based on the 15 cents bid, which annualizes to an additional 5.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 6.6% 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 84.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 90% return from this trading level, in addition to any dividends collected before the stock was called.
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