Maximizing Returns: Exploring Sapiens International Corp’s Covered Call Opportunity

Boost Your Income with Covered Calls

Shareholders of Sapiens International Corp NV (Symbol: SPNS) can enhance their income beyond the stock’s 2% annualized dividend yield by selling a covered call option for November at the $40 strike price. By doing this, they can collect a premium valued at 5 cents per share, which translates to an impressive annualized return of 21.1% against the current stock price. If the stock remains below $40, this method could yield a total annual return of 23.2%. However, any gains beyond the $40 mark would be forfeited if the stock is called away. Currently, SPNS shares would need to rise by 39% for that to occur. In that case, shareholders would realize a 39.2% return, factoring in dividends received prior to the call.

Investors should remember that dividends can be unpredictable, often fluctuating with a company’s profitability. By analyzing Sapiens International Corp’s dividend history chart below, investors can gauge the likelihood of maintaining a 2% annualized dividend yield.

Trading History Insights

The chart below shows SPNS’s trading activity over the past twelve months, with the $40 strike highlighted in red:

This trading history, along with the stock’s historical volatility, serves as a valuable resource for evaluating whether selling the November covered call at the $40 strike is a smart decision. Factors such as potential rewards and the risks of giving up upside beyond $40 are crucial to consider. The trailing twelve-month volatility for Sapiens International Corp NV, calculated using the last 251 trading days and the current price of $28.54, stands at 41%. Investors can explore various call option strategies by visiting the SPNS Stock Options page on StockOptionsChannel.com.

Market Activity Overview

During mid-afternoon trading on Tuesday, S&P 500 components saw a put volume of 767,980 contracts accompanied by call volume at 1.67 million contracts, resulting in a put:call ratio of 0.46 for the day. This ratio indicates a significantly higher volume of call options compared to puts, which suggests that traders are favoring calls during current market conditions.

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