Shareholders of NAPCO Security Technologies, Inc. (NSSC) can enhance their income by selling December covered calls at a $35 strike price, offering a premium of $1.45. This generates an additional 9.3% annualized return, combined with the existing 1.9% dividend yield, totaling 11.3% if the stock is not called away. For the shares to be called, the stock would need to rise 21% from its current price of $29.03.
The trailing twelve-month volatility of NSSC is recorded at 56%, providing insight for investors considering the potential risks and rewards of the strategy. If called, shareholders would realize a 26% return from the current trading level, including any dividends received.
