Travelers Companies Inc (NYSE: TRV) is offering shareholders a potential 7.4% annualized return by selling covered calls at a $310 strike price, based on a premium of $18.50. This strategy entails a 5.9% yield above the current 1.5% annualized dividend yield, contingent upon the stock not being called away. If TRV shares appreciate by 7.2% or more, shareholders would earn a total return of 13.7%, factoring in dividends prior to the option being executed.
As of mid-afternoon trading on Wednesday, the put volume for S&P 500 components reached 859,788 contracts, while call volume totaled 1.65 million, resulting in a put:call ratio of 0.52, indicating a preference for calls in options trading compared to the long-term median of 0.65. Travelers’ 12-month volatility is calculated at 22%.
