Shareholders of Dick’s Sporting Goods, Inc. (NYSE: DKS) have the opportunity to enhance their income by selling January 2027 covered calls at the $260 strike price. The current premium of $19.70 can offer an additional annualized return of 6.8%, increasing the total potential annualized yield to 9.1% assuming the stock is not called away. For this to occur, the stock would need to rise approximately 23.8% from its current price of $208.99, providing a total return of 33.2% when including dividends, if the shares are called.
The stock’s historical volatility stands at 44%, which shareholders should consider when assessing the risk-reward profile of selling covered calls. Additionally, in mid-afternoon trading on a recent Friday, the put volume among S&P 500 components was recorded at 1.31 million contracts, while call volume reached 2.20 million, resulting in a put:call ratio of 0.60. This indicates a higher preference for calls among traders compared to the long-term median ratio of 0.65.
