Maximizing Your Income with Steelcase’s Covered Call Strategy

Exploring the Benefits of Selling Covered Calls on Steelcase Stock

Shareholders of Steelcase, Inc. (Symbol: SCS) have an option to increase their income potential. One strategy is to sell the July covered call at the $12.50 strike price. This move allows investors to collect a premium of 75 cents, which translates into an annualized return of 12.7% based on the current stock price. When combined with the stock’s 3.5% annualized dividend yield, this strategy offers a total annualized return of 16.2%, assuming the stock is not called away.

However, if the stock exceeds the $12.50 mark, investors will forfeit any profit beyond this price point. The stock would need to rise by 11.3% for this to occur. In such a case, shareholders could still achieve an 18% return, inclusive of any prior dividends before the stock was called away.

Dividend amounts can fluctuate significantly, often reflecting the company’s profitability. For Steelcase, Inc., reviewing the dividend history chart is useful for assessing the likelihood of maintaining the current 3.5% annualized dividend yield.

The chart below illustrates the trading history for SCS over the past twelve months, highlighting the $12.50 strike price in red:

The above chart, combined with Steelcase’s historical volatility, serves as a valuable tool for evaluating whether selling the covered call is a worthwhile strategy. Analysis shows that Steelcase, Inc. has a trailing twelve-month volatility of 33%. For additional options contract ideas and expiration dates, visit the SCS Stock Options page on StockOptionsChannel.com.

On Tuesday afternoon, put volume among S&P 500 components reached 1.08M contracts, while call volume reached 2.62M. This led to a put-to-call ratio of 0.41 for the day, indicating significantly higher call volume than puts. This suggests that traders are leaning towards purchasing calls in the current options market.

Find out which 15 call and put options traders are focusing on today.

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