Shareholders of Interdigital Inc (Symbol: IDCC) seeking to enhance their income beyond the stock’s modest 0.8% annualized dividend yield have an intriguing opportunity. By selling the December 2026 covered call at the $520 strike price, investors can collect a premium based on the current bid of $26.50. This strategy translates to an additional 6.2% rate of return against the current stock price, which we refer to as the YieldBoost. In this scenario, shareholders could achieve a total annualized return of 7%, provided the stock is not called away.
However, it’s essential to note that any upside beyond $520 would be forfeited if the stock price rises and the shares are called away. For this to occur, IDCC shares would need to appreciate by 49.1% from current levels. In the event the stock is called, shareholders would still realize a substantial 56.7% return from this trading level, in addition to any dividends collected prior to the call.
Dividend amounts can be unpredictable, often fluctuating with the company’s profitability. To assess whether Interdigital Inc’s most recent dividend is likely to persist, examining the dividend history chart for IDCC below can provide valuable insights into the sustainability of the current 0.8% annualized yield.
Below is a chart illustrating IDCC’s trailing twelve-month trading history, with the $520 strike highlighted in red:
The above chart, along with the stock’s historical volatility, serves as a useful guide when combined with fundamental analysis. This approach helps determine whether selling the December 2026 covered call at the $520 strike offers a favorable reward for the risk of relinquishing any upside beyond that price. (Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve-month volatility for Interdigital Inc, considering the last 249 trading day closing values and today’s price of $348.97, to be 37%. For additional call options contract ideas with various expirations, visit the IDCC Stock Options page on StockOptionsChannel.com.
In mid-afternoon trading on Monday, the put volume among S&P 500 components reached 940,924 contracts, while call volume stood at 2.09 million, resulting in a put:call ratio of 0.45 for the day. Compared to the long-term median put:call ratio of 0.65, this indicates significantly higher call volume relative to puts. In essence, buyers are favoring calls in options trading today. Find out which 15 call and put options traders are discussing today.
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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.
