High Yield Dividend Stocks With Bullish Options Sentiment

"High yield" is always only relative to the price of a stock, it may just mean that its share price has dropped. But for the value investor, this isn't necessarily a bad thing. Sometimes, stocks show high dividend returns when their prices have been knocked by overly bearish investors, creating a golden investment opportunity for value hunters.

But how do you know when a high dividend yield stock is undervalued? Options trading can be a pretty reliable indicator in this department. Call options traders are usually savvy enough to recognize when a stock is trading below its fair value. They look for stocks expected to see significant upward momentum over the coming weeks. If they're buying call options on a high dividend yield stock, it means they think most of the bad news is already priced in, creating opportunity for near-term gains.

Source: Motley Fool

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