Unlocking Income Potential: Bloomin’ Brands’ Covered Call Strategy

Shareholders of Bloomin’ Brands Inc (Symbol: BLMN) can enhance their income with an attractive option strategy. By selling the October covered call at a $15 strike price, investors can collect a premium of 65 cents. This adds an impressive 8.2% to the annualized return, boosting the total potential yield to 16.2% if the stock remains uncalled. If the stock price rises above $15, however, the potential gains would be capped. It would require a 25.6% increase in BLMN’s stock for investors to face this scenario. Even then, they would still earn a notable 31.1% return on this trading level, plus any dividends received before the stock is called away.

Dividend returns can be unpredictable, influenced by the company’s profitability. For Bloomin’ Brands Inc, examining the dividend history chart can provide insights into the likelihood of maintaining the current 8% annualized dividend yield.

Below is a chart illustrating BLMN’s trailing twelve-month trading history, with the $15 strike price highlighted in red:

This chart, alongside BLMN’s historical volatility, aids investors in evaluating whether selling the October covered call at $15 is worth the potential risk of missing out on further gains. To assess the stock’s risk factors more thoroughly, it’s important to note that BLMN’s trailing twelve-month volatility is calculated at 44%, based on the last 249 trading day closing values and its current price of $12.00. For additional call options ideas with varied expiration dates, investors can explore the BLMN Stock Options page on StockOptionsChannel.com.

During mid-afternoon trading on Tuesday, the put volume among S&P 500 stocks reached 1.22 million contracts, while call volume stood at 2.56 million contracts, resulting in a put:call ratio of 0.48 for the day. This figure is significantly lower than the long-term median ratio of 0.65, showing a strong preference for calls in today’s options trading.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.