Atkore Inc Offers Attractive Income Opportunities with Covered Calls
Shareholders of Atkore Inc (Symbol: ATKR) might consider selling covered calls to enhance their income. Those interested can opt for a December covered call at the $85 strike, receiving a premium based on the $4.70 bid. This premium translates to an annualized return of 11.2% relative to the current stock price. Combining this with ATKR’s 1.9% annualized dividend yield, the total potential annualized return could reach 13.2% if the stock isn’t called away. However, if ATKR shares exceed the $85 threshold, the upside gained would be forfeited. Notably, a 22.1% increase in stock price would trigger this scenario, resulting in a total return of 28.9%, factoring in previously earned dividends.
It’s important to remember that dividend payouts are not entirely predictable, often fluctuating based on company profitability. For Atkore Inc, reviewing its dividend history can provide insight into whether the recent 1.9% yield is sustainable.
The following chart illustrates ATKR’s trading history over the last twelve months, with the $85 strike highlighted in red:
This chart, along with Atkore’s historical volatility, can assist investors in evaluating whether selling a covered call at the $85 strike provides a worthwhile risk-reward ratio. According to our calculations, the trailing twelve-month volatility for Atkore Inc, factoring in the last 250 trading days and the current price of $69.50, stands at 52%. For additional call option strategies across various expirations, visit the ATKR options page of StockOptionsChannel.com.
During mid-afternoon trading on Wednesday, S&P 500 components exhibited a put volume of 1.13M contracts compared to 2.91M call contracts, resulting in a put-call ratio of 0.39 for the day. This ratio indicates relatively high call volume, as it is significantly below the long-term median of 0.65, suggesting that traders are currently more inclined to purchase calls.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
