When it comes to gauging the stock market’s sentiment as a function of who is buying what, there is little that compares to tracking options buying activity. This is because options are not at all like buying shares of stock, as there are two major factors at play that significantly alter the risk-to-return profile of any given investment or trade idea.
Investors who buy a stock have a linear expectation of one-to-one returns on their capital, and the same goes for the inherent risk of the investment. On the other hand, options carry the aspect of leverage in them, as well as an expiration date, which makes the stakes even higher in terms of volatility in the duration of a given operation, as well as the fact that traders need to have the timing right lest they expire in their positions with a total loss.
Because of these implications, investors can now make sense of the unusual call options activity spotted in the Schwab US Dividend Equity ET (NYSEARCA: SCHD), an exchange-traded fund (ETF) focused on providing its shareholders with a competitive dividend yield to outperform most other indexes as well as the underlying inflation rate present in the United States economy at the time. This event also creates a potential opportunity in dividend stocks as well, as investors will now see.
Why Dividend Stocks Are Back in Play
Now that the economy is starting to slow down, perhaps as a broader cycle, as a natural follow-up to the few years of running hot, or as a potential effect of President Trump's recent rollout of new trade tariffs, there is one benchmark that is set to move more than all others.
That benchmark is the United States ten-year treasury bond, whose price moves inversely with its underlying yield. Given the volatility uptrend in the S&P 500 index, bonds have now become a potential safe haven for investors and traders looking to protect their portfolios from further volatility.
As more capital starts to chase bonds, driving yields lower, this benchmark becomes less competitive compared to other market offers. This is when the dividend ETF comes into play, and perhaps this is why there were up to 6,887 call options as of mid-April 2025.
The Proposal in Schwab’s Dividend ETF
[content-module:DividendStats|NYSEARCA:SCHD]With this amount of call option buying comes the inherent leverage of options, which could translate this event into a multi-million dollar view taken on the ETF. Understanding where the view and action are taking place, the question now becomes why these traders decided to go into this ETF.
One reason lies in the recent price action relative to the broader S&P 500 index. Over the past week, the dividend ETF outperformed the index by as much as 3%—a critical shift, especially given the renewed volatility sparked by headlines surrounding trade tariffs with China and other countries.
At today’s prices, the ETF’s per-share dividend payout translates into an annualized yield of up to 4.1%. That not only outpaces the current U.S. inflation rate but also comes close to matching the yield on the ten-year Treasury bond.
This mix of outperformance and income potential makes the ETF especially attractive in today’s volatile environment. Beyond just chasing returns, investors may also see the ETF's consistent dividend stream as a cushion against broader market pullbacks. The surge in options activity hints at institutional expectations not just for short-term gains, but for sustained relative strength and income-driven resilience.
Other Worthy Mentions
Just as sentiment starts to flow into this dividend ETF, the effect might also spill over onto other stable and predictable dividend stocks. Some of these stocks include the safest areas of the market, such as the real estate sector and the consumer defensive sector.
Known as “The Monthly Dividend Company,” Realty Income Appeals to Income Investors
[content-module:DividendStats|NYSE:O]When it comes to real estate, shares of Realty Income Co. (NYSE: O) offer investors the stability of defensive (not residential) properties, keeping the volatility of the stock severely compressed. More than that, the underlying integrity of these properties allow for a $3.22 dividend payout today, translating into a 5.5% yield today.
The company’s portfolio primarily consists of long-term, triple-net lease agreements with commercial tenants in essential industries like convenience stores, pharmacies, and supermarkets.
This structure shifts many property-related expenses to the tenants, reducing cost volatility for Realty Income and supporting steady cash flow.
Additionally, Realty Income’s track record of monthly dividend payments—often referred to as "The Monthly Dividend Company"—has made it a favorite among income-focused investors.
Its consistent performance, even during market downturns, underscores the appeal of real estate exposure that prioritizes reliability over speculation.
PepsiCo Stock Offers Defensive Strength and Dividend Upside
[content-module:DividendStats|NASDAQ:PEP]Another defensive place investors can start looking into is the nature of defensive products. For this area, shares of PepsiCo Inc. (NASDAQ: PEP) come into play, with not only a consensus price target of up to $168.1 per share to offer investors a net upside of as much as 18% from today’s discount but also an attractive dividend yield.
With a payout of up to $5.42 per share each quarter, shareholders can lock in an annualized yield of 3.8% to beat inflation and get the added benefit of double-digit upside, turning their portfolios into a market-beating machine that also provides additional dividend liquidity every quarter.
PepsiCo’s strength lies in the steady demand for its core product lines—snacks and beverages—which remain resilient even during economic downturns.
This makes the company a staple in the defensive sector, where consumer loyalty and brand dominance help sustain revenue regardless of broader market conditions.
What’s more, PepsiCo’s history of consistent dividend growth reflects a shareholder-friendly capital allocation strategy. With its balanced blend of income and capital appreciation potential, the stock offers investors a compelling case for long-term stability paired with meaningful upside.
Where Should You Invest $1,000 Right Now?
Before you make your next trade, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.
Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
They believe these five stocks are the five best companies for investors to buy now...