Maximize Income with Perdoceo Education’s Covered Calls
Exploring the Potential of Selling January Covered Calls
Shareholders of Perdoceo Education Corp (Symbol: PRDO) can enhance their income, currently at a 2% annual dividend yield, by selling January covered calls with a strike price of $35. By doing so, they can collect a premium of 5 cents, which signifies an added 22.8% annual return based on the stock’s current price. This approach, referred to as YieldBoost by Stock Options Channel, could result in a total annualized rate of 24.8% if the stock is not called away. However, if the stock ascends past $35, shareholders would forfeit any gains beyond that threshold. Notably, PRDO shares would need to increase by 31.3% from current levels for this to occur, resulting in a 31.5% return if called, along with any dividends collected before that point.
Dividend payments can vary due to changes in a company’s profitability. To assess the sustainability of Perdoceo Education Corp’s recent dividend, the chart below displays the dividend history for PRDO, which can aid shareholders in evaluating whether the current 2% annual yield is realistic.
The following chart illustrates PRDO’s trading history over the last twelve months, with the $35 strike price marked in red:
This chart, alongside the stock’s historical volatility, provides useful insights when analyzing whether selling the covered call at the $35 strike is worthwhile. Calculating the trailing twelve-month volatility for PRDO, which considers the last 250 trading day closing values and today’s price of $26.57, yields a figure of 40%. For additional call options ideas across different expiration dates, check out the PRDO Stock Options section at StockOptionsChannel.com.
During mid-afternoon trading on Tuesday, put volume among S&P 500 components reached 750,609 contracts, while call volume stood at 1.73 million. This resulted in a put:call ratio of 0.43, indicating relatively high call volume compared to puts, especially against a long-term median ratio of 0.65. Today’s trading patterns suggest buyers are leaning toward calls in options markets.
Explore the Top YieldBoost Calls of the S&P 500 »
Additional Resources:
• MTRN Options Chain
• ASYS Historical Stock Prices
• DMXF Market Cap History
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
