Shareholders of Churchill Downs, Inc. (CHDN) have an opportunity to enhance their income by selling a December covered call at the $100 strike price, offering a potential premium of $8.50, which could yield an annualized return of 11.6% in addition to the stock’s current 0.5% dividend yield. If the stock price exceeds $100, shareholders may miss out on additional upside, but would still realize a total return of 19.4% if called away after a price increase of 10.1%.
As of Thursday mid-afternoon trading, Churchill Downs shares were priced at $89.02, with the company’s historical volatility calculated at 34%. In the broader market, S&P 500 options trading reflected a call volume of 2.49 million contracts against a put volume of 1.37 million, resulting in a put-to-call ratio of 0.55, indicating a strong preference for call options among traders.
