Strategies for Increasing Income with Group 1 Automotive Stock

Exploring Covered Calls for Enhanced Returns

Shareholders of Group 1 Automotive, Inc. (Symbol: GPI) seeking to boost their income beyond the stock’s modest 0.5% annual dividend yield might consider selling the April 2025 covered call at the $410 strike. By doing so, they can secure a premium based on the $20.40 bid, resulting in an additional 11.2% rate of return on the current stock price (this is referred to as the YieldBoost at Stock Options Channel). If the stock is not called away, this could lead to a total annualized return of 11.7%. However, if GPI shares climb above $410, the potential for further gains would be forfeited. With a required increase of 12.3% from current levels for this to happen, shareholders could still realize a total return of 17.9%, which includes any dividends accrued before the stock was called.

Typically, dividend amounts can fluctuate based on a company’s profitability. Examining the dividend history chart for Group 1 Automotive, Inc. can offer insights into the sustainability of the current yield and help determine if the 0.5% annualized dividend expectation is realistic.

The following chart illustrates GPI’s trailing twelve months of trading history, with the $410 strike prominently highlighted in red:

This chart, alongside an analysis of the stock’s historical volatility, can aid in evaluating whether selling the April 2025 covered call at the $410 strike yields a favorable reward relative to the risk of losing potential gains beyond that point. Current analysis shows that 32% is the trailing twelve-month volatility for Group 1 Automotive, which considers the last 251 trading days as well as today’s price of $365.05. For alternative call option strategies with various expirations, investors can check the GPI Stock Options page on StockOptionsChannel.com.

As of mid-afternoon trading on Wednesday, the put volume among S&P 500 companies reached 845,598 contracts, with call volume at 1.47 million, translating into a put:call ratio of 0.58 for the day. This figure indicates a higher volume of calls relative to puts, especially when compared to the long-term median put:call ratio of 0.65; thus, it appears that buyers show a preference for calls in the options market today.

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