Griffon Corp. Offers Income Opportunities Through Covered Calls
For shareholders of Griffon Corp. (Symbol: GFF) aiming for enhanced income beyond the Stock’s 1% annualized dividend yield, there’s an option to consider. Selling the December covered call at the $75 strike allows investors to collect a premium based on the $6.00 bid. This translates to an impressive annualized return of 14.9% on the current Stock price. If the Stock is not called away, shareholders could see a total annualized return of 16%. However, if the Stock does reach the $75 mark and is subsequently called away, shareholders would have already earned a 17.3% return, factoring in dividends received before the sale.
Dividend payouts can vary and typically reflect a company’s profitability. Thus, examining the dividend history for GFF is essential to assessing the likelihood of maintaining the current 1% annualized yield.
Below is the dividend history chart for GFF:
Additionally, the following chart illustrates GFF’s trailing twelve-month trading data, with the $75 strike noted in red:
The trading history and GFF’s volatility serve as valuable tools for evaluating whether the December covered call at $75 is a sound decision considering the potential risk of losing upside above this mark. The trailing twelve-month volatility, calculated from the last 250 trading days along with the current price of $69.19, stands at 46%. For insights into other call options across different expirations, refer to the GFF Stock Options page.
In mid-afternoon trading on Wednesday, S&P 500 put volume reached 676,775 contracts, while call volume was at 1.23 million, yielding a put-to-call ratio of 0.55 for the day. This figure is notably higher than the long-term median put-to-call ratio of 0.65, indicating a strong preference among buyers for call options in trading today.
For more information on options trading dynamics, including trending call and put options, further resources are available.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
