Boost Your Potential Earnings with Bread Financial’s Covered Call Strategy
Unlock Higher Returns Beyond the Dividend Yield
Shareholders of Bread Financial Holdings Inc (Symbol: BFH), currently seeing a 1.3% annualized dividend yield, might consider selling a covered call with a June 2025 expiration at the $75 strike. By doing so, investors can collect a premium trading at a $4.70 bid, potentially adding an annualized return of 14.3%, bringing the total annualized return to 15.6% if the stock remains untouched. The only risk is that if the stock exceeds $75, the upside will be forfeited. However, for BFH shares to reach that point, they must rise by 15.3% from current levels. In that case, shareholders would see a combined return of 22.5%, in addition to any dividends prior to the stock’s sale.
Dividend amounts can be unpredictable, as they often fluctuate with a company’s profitability. For Bread Financial Holdings Inc, examining the past dividend history can be helpful to determine if the recent dividend is sustainable, thus making the 1.3% annualized yield more predictable.
Below is a chart capturing BFH’s trailing twelve-month trading history, with the $75 strike marked in red:
Utilizing the previous chart and the stock’s historical volatility can guide investors in assessing whether selling the June 2025 covered call at a $75 strike presents an appealing risk-reward dynamic. The trailing twelve-month volatility for Bread Financial Holdings Inc, based on the last 251 trading days along with today’s price of $64.97, is calculated at 46%. For additional call option strategies across various expiration dates, check out the BFH Stock Options page on StockOptionsChannel.com.
During mid-afternoon trading on Wednesday, the S&P 500 saw a put volume of 917,141 contracts and call volume at 2.30 million, resulting in a put:call ratio of 0.40 for the day. This number is significantly lower than the long-term median of 0.65, indicating that call options are being favored by buyers in today’s trading environment. Explore which 15 call and put options are trending among traders today.
Top YieldBoost Calls of the S&P 500 »
Also see:
- UVSP Market Cap History
- OCLR Price Target
- PBA Price Target
The views and opinions expressed herein are those of the author and do not necessarily represent those of Nasdaq, Inc.
