Globe Life Inc: Maximizing Income Through Covered Calls

Shareholders of Globe Life Inc (Symbol: GL) seeking to enhance their income beyond the stock’s 0.9% annual dividend yield have the option to sell an August covered call at the $125 strike. This move could allow investors to collect a premium based on the $8.50 bid, which translates to an impressive annualized return of 20.3% relative to the current stock price. When combined with the existing dividend yield, shareholders could realize a total annualized return of 21.3% if the stock is not called away.

However, potential upsides above $125 would be forfeited if the stock price rises sufficiently to reach that level and the shares are called away. Notably, the stock would need to rise by 5.7% from its current price for this to occur. In such a scenario, the shareholder would still see a solid 12.9% return from this trading level, in addition to any dividends received before the stock was called.

Dividend Trends and History

Dividend amounts are typically influenced by a company’s profitability, which can be unpredictable. For Globe Life Inc, analyzing the dividend history can provide insight into whether shareholders should expect the continuation of the 0.9% annualized yield. Below is the dividend history chart for GL:

Trading History Insights

The chart depicting GL’s trailing twelve-month trading history highlights the $125 strike in red:

This chart, along with the stock’s historical volatility, can inform investors about the potential risks and rewards of selling the August covered call at the $125 strike. While options frequently expire worthless, this decision should be weighed against the expected returns. Currently, Globe Life Inc’s trailing twelve-month volatility is calculated at 85%, based on the last 251 trading day closing values, along with the current price of $117.68. For more call options contract ideas across various expirations, visit the GL Stock Options page on StockOptionsChannel.com.

Market Activity and Trends

During mid-afternoon trading on Tuesday, the volume of put options among S&P 500 components was recorded at 1.17 million contracts, with call options at 1.99 million. This results in a put:call ratio of 0.59 for the day. This figure indicates a higher call volume relative to puts compared to the long-term median put:call ratio of 0.65, suggesting that buyers today are favoring calls in options trading.

To discover the most discussed call and put options today, find out here.

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