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Shareholders of CNH Industrial NV (symbol: CNH) have the opportunity to enhance their income by selling a January 2027 covered call at the $12.50 strike, collecting a premium of $1.00. This strategy could yield an additional 7.6% return, combining with the stock’s 2.4% annualized dividend yield for a total of 10% annualized, assuming the stock is not called away.
At the current stock price of $10.63, CNH shares would need to rise 17% to $12.50 for the covered call to be executed, resulting in a total return of 26.4% for shareholders, inclusive of dividends, if the stock is called.
As of mid-afternoon trading on Thursday, the put volume among S&P 500 components was 914,814 contracts compared to a call volume of 1.84 million, creating a put:call ratio of 0.50, indicating a strong preference for call options among traders.
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