Shutterstock Inc: Covered Call Strategy and Dividend Insights
Shareholders of Shutterstock Inc (Symbol: SSTK) seeking to enhance their income beyond the stock’s 7.5% annualized dividend yield can consider selling the June covered call at the $20 strike. By doing so, they can collect a premium based on the 55 cents bid, which translates to an additional annualized return of 26.5%. When combined with the current dividend yield, this potentially raises the total annualized rate of return to 34%, provided the stock does not surpass $20.
However, if the stock reaches $20, shareholders will forfeit any additional upside. The SSTK shares would need to increase by 13.6% from current levels for this situation to occur. In that case, shareholders would have realized a 16.7% return at the trading level, in addition to any dividends received prior to the stock being called.
Dividend Reliability and Historical Context
Dividend amounts can fluctuate based on a company’s profitability. Investors should review Shutterstock Inc’s dividend history to evaluate the sustainability of the latest dividend. A deeper dive into the dividend history chart for SSTK can provide insights into whether maintaining the 7.5% annualized yield is reasonable.
Trading Dynamics and Options Strategy
The accompanying chart illustrates SSTK’s trailing twelve-month trading activity, highlighting the $20 strike in red. This visual, combined with the stock’s historical volatility, can help inform whether the covered call strategy at the $20 strike offers a favorable trade-off, considering the risk of capping potential gains beyond this level.
Currently, the trailing twelve-month volatility for Shutterstock Inc, calculated using the last 250 trading days and the current price of $17.62, stands at 51%. For additional call option strategies across various expirations, investors can consult the SSTK options page on StockOptionsChannel.com.
Market Sentiment and Trading Volume
In mid-afternoon trading on Thursday, put volume among S&P 500 components reached 908,967 contracts, while call volume saw a total of 1.99 million contracts. This resulted in a put-to-call ratio of 0.46 for the day. Compared to the long-term median put-to-call ratio of 0.65, this signifies a notably higher preference for call options among buyers today.
For insights on the most talked about call and put options, readers can explore further options trading discussions.
Top YieldBoost Calls of the S&P 500 »
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
