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Shareholders of CNH Industrial NV (Symbol: CNH) can enhance their income by selling the December covered call at the $15 strike, potentially earning an additional 11.1% rate of return on top of the stock’s current 1.8% annualized dividend yield. If the stock price rises above $15, it would require a 10.9% increase for the shares to be called away, resulting in a total return of 16.1% including dividends.
The trailing twelve-month volatility for CNH is calculated at 38%, which can help investors assess the risk of capping potential upside with the covered call strategy. On Wednesday afternoon, S&P 500 options trading recorded a put volume of 964,394 contracts compared to call volume of 1.71 million contracts, yielding a put:call ratio of 0.56, indicating a preference for calls among traders.
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