Deluxe Corp Offers Attractive Options for Income-Seeking Investors
Shareholders of Deluxe Corp (Symbol: DLX) looking to enhance their earnings beyond the stock’s 5.2% annualized dividend yield may consider selling the July 2025 covered call at the $25 strike. By doing this, they can collect a premium based on a $2.00 bid, translating to an additional 13.8% return based on the current stock price. This potential annualized return comes to a total of 18.9% if the stock is not called away. However, if the stock rises above $25, shareholders forfeit any gains above that price. Currently, DLX shares would need to increase by 6.9% for the stock to be called. In that case, shareholders would enjoy a 15.5% return, which includes any dividends accrued before the shares were called.
Dividend payments typically fluctuate according to a company’s profitability. To assess whether the recent dividend is likely to persist, examining the dividend history chart for DLX can provide useful insights that inform expectations surrounding the 5.2% annualized dividend yield.
Below is a chart depicting DLX’s trailing twelve-month trading history, with the $25 strike highlighted in red:
The charts above, along with the stock’s historical volatility, can guide investors when considering the trade-off of selling the covered call at the $25 strike, which entails relinquishing potential upside beyond that amount. To assist in this analysis, we calculate the trailing twelve-month volatility for Deluxe Corp. Based on the last 251 trading day closing values and today’s price of $23.17, the volatility stands at 36%. For additional call option strategies spanning various expiration dates, you can visit the DLX Stock Options page on StockOptionsChannel.com.
On Tuesday, during mid-afternoon trading, the S&P 500 recorded a put volume of 841,155 contracts against a call volume of 1.76 million, resulting in a put:call ratio of 0.48 for the day. This figure significantly contrasts with the long-term median put:call ratio of 0.65, indicating that traders are leaning heavily towards call options in today’s trading environment.
Find out which 15 call and put options traders are discussing today.
Top YieldBoost Calls of Stocks with Insider Buying »
Also see:
• Manufacturing Dividend Stocks
• Institutional Holders of PMFG
• Institutional Holders of HI
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
