Maximizing Returns with Covered Calls: Comfort Systems USA Inc (Symbol: FIX)
A Strategic Approach to Income Generation Beyond Dividends
Shareholders of Comfort Systems USA Inc (Symbol: FIX) aiming to enhance their income beyond the stock’s annualized dividend yield of 0.3% may consider selling a covered call. Specifically, they can opt for the May 2025 call at the $450 strike price, acquiring a premium at the current $48.00 bid. This strategy could lead to an impressive annualized return of 19.7%, bringing the total potential annualized return to around 20%, provided the stock remains uncalled.
If the stock price rises above $450, shareholders would miss out on additional gains, as their shares would be called away. However, FIX shares would need to appreciate by 7.4% from current levels for this to occur. In such a case, the total return for shareholders would amount to 18.9%, factoring in both the premiums collected and any accrued dividends before the shares are called.
Dividend payments are often unpredictable and typically fluctuate with a company’s profitability. To evaluate the sustainability of Comfort Systems’ recent dividend, investors can refer to the company’s dividend history chart below:
Below is a chart illustrating FIX’s trading performance over the past twelve months, with the $450 strike indicated in red:
Analyzing the chart alongside the stock’s historical volatility can provide valuable insights. Investors can assess whether selling the May 2025 covered call at the $450 strike offers a fair reward for the risk of losing profit potential above that price. Currently, the trailing twelve-month volatility for Comfort Systems USA Inc is calculated at 44%. For alternative call options strategies available with different expirations, visit the FIX Stock Options page on StockOptionsChannel.com.
In the mid-afternoon trading session on Wednesday, the put volume among S&P 500 constituents was recorded at 845,598 contracts, while call volume reached 1.47 million. This resulted in a put-to-call ratio of 0.58 for the day, indicating a preference for calls compared to puts. Historically, the long-term median put-to-call ratio stands at 0.65, suggesting strong call activity in today’s options trading.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
