Maximizing Returns with Scorpio Tankers Inc: A Look at Covered Calls and Dividends
Shareholders of Scorpio Tankers Inc (Symbol: STNG) can enhance their income potential. Selling a covered call for June 2025 at the $65 strike price could yield additional income. By collecting a premium from a $3.90 bid, investors would see an annualized return of 10.6% based on the current stock price, bringing the total potential annualized return to 13.4%, assuming the stock remains uncalled. If the stock price reaches $65, shareholders would miss any gains above that; however, this scenario requires a 12.1% increase from current levels. If the stock is called, shareholders could achieve an 18.8% return, supplemented by any dividends received prior to the call.
Dividend payments can be unpredictable, often reflecting changes in a company’s profitability. Reviewing the dividend history for Scorpio Tankers Inc, as shown in the chart below, can help investors assess the likelihood of maintaining the current 2.8% annualized dividend yield.
The chart below highlights STNG’s trading history over the last year, with the $65 strike point marked in red:
This chart, along with the stock’s historical volatility, provides insight into whether selling the June 2025 covered call at the $65 strike is a sound decision given the risk of relinquishing potential gains above that price. Scorpio Tankers Inc’s trailing twelve-month volatility stands at 31%, calculated from the last 251 trading days and the current price of $57.88. To explore more options contracts with different expiration dates, visit the STNG Stock Options page on StockOptionsChannel.com.
In mid-afternoon trading on Friday, the S&P 500 saw a put volume of 1.24 million contracts alongside call volume of 2.19 million, resulting in a put:call ratio of 0.56. This level of call volume indicates a stronger preference for calls among options traders compared to the long-term median put:call ratio of 0.65.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
