Shareholders of Universal Corp (Symbol: UVV) can enhance their income beyond the current 6.2% annualized dividend yield by selling August covered calls at the $60 strike, which offers a premium of 5 cents per share. This strategy could yield an additional 34.5% rate of return, leading to a total annualized return of 40.8% if UVV shares are not called away. Should the shares rise above $60, a 13.6% return would be realized, plus any dividends collected prior to the sale.
As of Friday’s mid-afternoon trading, UVV’s stock price is at $52.51 with a trailing twelve-month volatility of 26%. Additionally, the overall market showed a put volume of 1.19 million contracts and call volume of 2.7 million, equating to a put:call ratio of 0.44, significantly lower than the long-term median of 0.65, indicating a strong preference for call options among buyers.
