Huntsman Corp (NYSE: HUN) shareholders have the opportunity to enhance their income by selling November covered calls at an $18 strike price, collecting a premium of $1.35 per contract. This strategy could yield an annualized return of 18.6% if the stock is not called away, compared to the stock’s current dividend yield of 2.6%. However, if HUN stock rises above $18, shareholders would forfeit the upside, which requires the stock to increase by 36.5% from its current price of $13.38 to be called away.
The stock has seen a trailing twelve-month volatility of 61%, indicating a relatively high level of risk. As of Tuesday afternoon trading, the put volume among S&P 500 components was 1.66 million contracts against call volume of 2.81 million, reflecting a put-to-call ratio of 0.59, showing a preference for calls among traders.
