Get Paid 10% To Let Someone Else Chase HLT Stock Higher
For Hilton shareholders, here’s a way to get paid a guaranteed income now on the stock you already own, in exchange for agreeing to sell at a higher price if the rally continues.
Hilton Worldwide (HLT) has delivered a solid run for investors, but with the stock trading about 8% below its 52-week high after a flat few months, it’s fair to ask if the easy money has been made. For shareholders wondering what’s next, there’s a straightforward trade that pays you cash now for your patience, income you get to keep no matter which way the stock moves from here.
10% annualized income on HLT shares you already own, with 8.6% of upside room, by selling a covered call.
- You own (or buy) 100 shares of HLT near today’s price of $322.43.
- Sell one call option on HLT expiring 6/17/2027, with a strike price of $350, about 8.6% above today.
- Collect roughly $2,980 in premium up front per contract (each contract covers 100 shares), which you keep no matter what the stock does.
- That premium is about 10.5% annualized on the $32,243 of stock, income you earn just for holding.
- If HLT finishes above $350, your shares are called away at $350. Counting the premium, your total return works out to about 20% annualized, but you give up any gains above the strike.
Two Ways This Plays Out, Both Pay You
If HLT finishes below $350 on 6/17/2027, the call expires worthless, and you keep the full $2,980 premium and all your shares. That is about 9.2% over 324 days, income earned just for holding, and you are free to sell another call.
If HLT finishes above $350, your 100 shares are called away at $350. You still keep the $2,980 premium, and counting it your total gain works out to about 18% over the holding period (about 20% annualized), a healthy exit. The cost of the trade is that any gain above $350 is no longer yours. And if the stock instead falls, you keep the premium but still ride the shares down, cushioned only slightly.
So the whole trade comes down to one thing: how much of that upside are you really likely to give up, and would you be content to sell at that higher price?
Is HLT Likely To Run Past Your Strike?
The only real cost is capping your potential gains. If Hilton shares take off and fly well past your agreed-upon selling price, you’ll miss out on that extra upside. Management is certainly optimistic, pointing to a broadening U.S. recovery that’s establishing a “real sort of run rate growth” of 2% to 2.5% as a new floor. They see what the CEO calls “tailwind[s]” that could build on that base, and with a development pipeline at a “record 541,000 rooms,” it seems hotel owners are betting on sunnier days ahead.
Yet there are clouds on the horizon. That strong recent performance was boosted by one-offs like the World Cup, and there are significant drags overseas. RevPAR in the Middle East and Africa fell by approximately 30% year-over-year, while in China it decreased 2.2%. Perhaps more telling, the post-pandemic travel surge appears to be normalizing, with leisure transient RevPAR growth slowing to just 1.6%. This is the context for guidance that implies a slowdown in the fourth quarter, a detail analysts on the company’s earnings call were quick to notice.
How Much Could The Stocks You Hold Pay You?
You may not own HLT, but you almost certainly own something that could be paying you. Our Covered Call Finder lets you type in a stock, or a few, and instantly see the income a covered call could generate on each, then dial the strike up or down with a slider to balance more income against more upside. It is the quickest way to see what the names in your own portfolio could pay.
Income From A Big Position Does Not Shrink The Position
Selling calls generates income from a holding you already own, which makes now the right moment to check how large that holding has actually become. That check is exactly what the Trefis Wealth team provides, with the same rules-based systematic discipline that runs our High Quality Portfolio. Request a free vulnerability audit of your biggest positions.