Maximize Your Income with Vishay Intertechnology’s Covered Call Strategy

Shareholders of Vishay Intertechnology, Inc. (Symbol: VSH) have an opportunity to enhance their income beyond the stock‘s 3.5% annualized dividend yield. By selling the July covered call at the $12.50 strike, investors can collect a premium based on the 85 cents bid. This yields an additional annualized return of 28.5% in relation to the current stock price. Combined with the existing dividend, this could result in a total annualized rate of 32% if the stock is not called away. However, should the stock price exceed the $12.50 mark, any upside would be forfeited. This would require VSH shares to rise by 9% from their current levels. In a scenario where the stock is called, shareholders would realize a 16.4% return from this trading level, plus any dividends received prior to the stock being called.

Understanding Dividend Stability and History

Generally, dividend amounts fluctuate with a company’s profitability. For Vishay Intertechnology, Inc., examining the dividend history chart below can provide insight on the likelihood of maintaining the current 3.5% yield.

VSH’s Trading Activity and Options Insights

The chart below illustrates VSH’s trailing twelve months of trading activity, emphasizing the $12.50 strike in red:

This trading chart, alongside the stock’s historical volatility, can help investors assess whether selling the July covered call at the $12.50 strike is a worthwhile risk, given the potential loss of upside beyond that price. Historically, many options expire worthless. To aid your decision, we have calculated VSH’s trailing twelve-month volatility at 50%, based on the last 250 closing values and today’s price of $11.40. For more call option strategies across varying expiration dates, please visit the VSH Stock Options page on StockOptionsChannel.com.

Current Market Activity and Trends

As of mid-afternoon trading on Monday, put volume among S&P 500 components reached 997,586 contracts, while call volume stood at 1.70 million, resulting in a put-to-call ratio of 0.59. This indicates a high level of call activity relative to puts, as compared to the long-term median put-to-call ratio of 0.65. Essentially, buyers are currently favoring call options in the market. For insights into which 15 call and put options traders are focused on today, visit the link below.

Top YieldBoost Calls of the S&P 500 »

Also See:

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• GMS Stock Predictions
• PSCF Dividend History

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.