Boosting Your Income with Options
Shareholders of Scholastic Corp (SCHL) seeking to increase their earnings beyond the stock’s modest 2.1% annualized dividend yield have an opportunity to capitalize on options trading. By selling the September covered call at the $45 strike, investors can seize the $2.00 bid premium. This move translates to a substantial 9.8% rate of return against the current stock price, a strategy Stock Options Channel cleverly dubs the “YieldBoost.” This potential yield enhancement could bump up your overall annualized rate to an impressive 11.9%, provided the stock doesn’t hit $45 and get called away.
However, if the stock does reach $45 and is called away, investors might lose out on potential upside. Yet, for this scenario to materialize, SCHL shares would have to climb a notable 19.1% from their current levels. Even so, in the event of the stock’s call, the shareholder would still have reaped an attractive 24.3% return from this calculated level, in addition to any previously collected dividends.
Understanding Dividend Trends
Dividend amounts can be unpredictable, often tethered to the ebb and flow of company profits. For Scholastic Corp, assessing SCHL’s dividend history chart is crucial in gauging the likelihood of sustaining the existing 2.1% annualized dividend yield.
Using Market Data to Make Informed Decisions
Reviewing the trailing twelve-month trading history chart for SCHL, with the $45 strike highlighted in red, coupled with an evaluation of the stock’s historical volatility, can guide investors in making informed choices about selling the September covered call at the $45 strike. It offers a balance between the rewards and risks associated with relinquishing potential gains beyond $45.
Market Insights and Trends
In the afternoon session on Wednesday, the S&P 500 components witnessed a notable put:call ratio of 0.52, with put volume at 713,744 contracts and call volume at 1.36M. This ratio signifies an affinity towards calls over puts among buyers today, reflecting high call volume compared to the long-term median put:call ratio of .65.
Want to know more about the top call and put options traders are discussing today? Dive deeper into today’s market dynamics to stay ahead of the curve.
Top YieldBoost Calls of the S&P 500 »
Also see:
- Institutional Holders of CINC
- BNTC YTD Return
- HIVE Price Target
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.
