Shareholders of Power Integrations Inc. (POWI) can enhance their income by selling a covered call at the $60 strike expiring in January 2026. The current bid premium of $2.90 annualizes to a 9.2% return, combined with the existing 1.6% annual dividend yield, resulting in a total potential return of 10.8% if the stock remains below $60. Should the stock exceed $60, it would need to rise 18.1%, resulting in a 23.8% total return from the current trading level, including any dividends before being called away.
As of mid-afternoon trading on Tuesday, S&P 500 put volume reached 692,131 contracts, while call volume was at 1.39 million, indicating a put:call ratio of 0.50, significantly below the long-term median of 0.65, suggesting a strong preference for call options among traders.
