Shareholders of Pebblebrook Hotel Trust (NYSE: PEB) can enhance their income by selling a December covered call with a $12.50 strike, earning a premium of $0.60, which translates to an annualized return of 12.2% based on the current stock price of $11.20. If PEB shares rise 12.6% and are called away, this would yield an 18% total return, including dividends.
The stock currently has a 0.4% annualized dividend yield, and its 12-month volatility is calculated at 46%. On Thursday afternoon, put volume among S&P 500 components was 962,087 contracts compared to 1.74 million for calls, resulting in a put/call ratio of 0.55, indicating a higher preference for call options.
