Boosting Income with Covered Calls on SBA Communications

For shareholders of SBA Communications Corp (Symbol: SBAC) seeking to enhance their income beyond the stock’s 2% annualized dividend yield, a strategic option is to sell a covered call at the $220 strike for September. This move allows investors to collect a premium based on a $15.20 bid, which translates to an additional 13.5% rate of return when annualized. If the stock remains below the $220 strike price, shareholders could achieve a total annualized return of 15.5%. However, if the stock surpasses $220, investors will miss out on any gains above that level. Currently, SBA Communications shares would need to climb 2.1% from current prices for the stock to be called away, ensuring a 9.1% return in that event, alongside any dividends received beforehand.

Dividend amounts can be unpredictable and often fluctuate with each company’s profitability. Examining the dividend history of SBA Communications can aid investors in assessing the likelihood of continuing the recent 2% annualized yield. Below is the dividend history chart for SBAC:

The following chart illustrates SBAC’s trading history over the trailing twelve months, with the $220 strike highlighted in red:

These charts, combined with fundamental analysis and the stock’s historical volatility, assist investors in evaluating whether selling the September covered call at the $220 strike presents a favorable risk-reward scenario. The annualized volatility for SBA Communications, based on the last 250 trading days and the current price of $216.54, stands at 26%. For additional call option ideas across various expirations, visit the SBAC stock options page on StockOptionsChannel.com.

In midday trading on Wednesday, the put volume among S&P 500 components reached 1.16 million contracts, while call volume was at 2.09 million, resulting in a put-to-call ratio of 0.56. This indicates a higher preference for call options compared to puts, as evidenced by the long-term median put-to-call ratio of 0.65. This reinforces the notion that buyers are favoring calls in today’s options trading environment.

Find out which 15 calls and puts are trending among traders today.

Top YieldBoost Calls of Stocks Analysts Like »

Also see:

• ETFs Holding CARB
• NCR YTD Return
• Institutional Holders of TRPL

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.