W.W. Grainger Inc. (Symbol: GWW) shares are currently trading at $1,061.19. Investors interested in purchasing shares may consider selling December put contracts at an $820 strike price, which has a current bid of $5.60. This strategy offers a 1.4% annualized return compared to the 0.8% dividend yield associated with GWW at its current share price.
If the stock price declines by 22.5% to $820, the put seller’s effective cost basis would be $814.40 per share. The historical volatility of GWW is 22%, which could help investors assess the risk versus reward of this strategy. Current investors should also be aware that dividend amounts may fluctuate based on the company’s profitability.
