Maximizing Returns: Amcor plc’s Covered Call Strategy

Shareholders of Amcor plc (Symbol: AMCR) have an opportunity to increase their income beyond the stock’s current 5% annualized dividend yield. By selling the April 2025 covered call at the $11 strike price, investors can earn a premium of 10 cents per share. This approach offers an additional 2.4% annualized return relative to the present stock price—what we refer to as the YieldBoost. Consequently, if the stock does not get called away, the total annualized return would reach 7.4%. However, any gains above the $11 threshold would be forfeited if the stock is called away, requiring a 9.1% increase in Amcor shares for that scenario. Should this occur, shareholders would realize a total return of 10.1%, inclusive of dividends earned prior to the call.

Dividend payments can be unpredictable, often fluctuating with the company’s profitability. To assess the likelihood of Amcor continuing its most recent dividend, examining the dividend history chart for AMCR can provide valuable insights as to whether a 5% annualized yield is realistic.

The chart below illustrates AMCR’s trading history over the past twelve months, with the $11 strike price marked in red:

Utilizing this chart alongside fundamental analysis can help evaluate whether selling the covered call at the $11 strike provides sufficient reward compared to the risk of potential upside loss. Amcor plc’s trailing twelve-month volatility, calculated using the last 251 trading day closing values and today’s price of $10.10, stands at 22%. For more options contract ideas associated with varying expiration dates, check out the AMCR Stock Options page on StockOptionsChannel.com.

In mid-afternoon trading on Thursday, the S&P 500 saw put volume of 981,376 contracts, while call volume reached 1.82 million, resulting in a put:call ratio of 0.54. This figure is notably lower than the long-term median ratio of 0.65, indicating a preference among traders for calls in today’s options market.

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