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Shareholders of Signet Jewelers Ltd (SIG) can enhance their income by selling June 2026 covered calls at a $120 strike, collecting a premium of $8.00, which equates to an annualized additional return of 11.5%. This brings the total potential annualized return to 12.8% if the stock is not called away, with a significant gain of 24.1% if the stock rises above the $120 mark.
The current trading price of SIG is $103.21, meaning the stock would need to rise by 16.4% to trigger a call. Furthermore, the trailing twelve-month volatility is calculated at 56%, which can help investors in deciding whether this strategy offers a suitable reward against the associated risks.
On Wednesday, put volume among S&P 500 components reached 554,595 contracts, while call volume was significantly higher at 1.65 million contracts, resulting in a put:call ratio of 0.34, indicating a strong preference for calls among traders.
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