Maximizing Returns with Covered Calls on Western Alliance Bancorporation
Shareholders of Western Alliance Bancorporation (Symbol: WAL) seeking higher income opportunities, beyond its 1.7% annualized dividend yield, might consider selling a January 2027 covered call at the $110 strike price. By doing so, they can secure a premium of $11.00, which translates into an annualized return of 6.5% based on the current stock price. This strategy provides a combined total return of 8.3% annually, assuming the stock isn’t called away. However, if the shares rise above $110, shareholders would forfeit any additional upside. Notably, the stock would need to increase by 27.3% from its current level for this to happen. In such a scenario, shareholders could see a total return of approximately 40%, in addition to any dividends received prior to the call.
Dividend payments can be unpredictable and typically fluctuate with the company’s profitability. For investors considering Western Alliance Bancorporation, reviewing its dividend history chart (provided below) can offer insights into whether the current 1.7% annualized dividend yield is sustainable.
Trading History and Volatility
Below is a chart portraying WAL’s trading history over the trailing twelve months, with the $110 strike price marked in red:
The accompanying chart and historical volatility serve as important tools in conjunction with fundamental analysis. They can help determine if selling the January 2027 covered call at the $110 strike is a worthwhile risk, given the potential loss of upside beyond that price. Currently, WAL’s trailing twelve-month volatility, calculated from the last 250 trading days plus the current price of $87.28, stands at 39%. For additional covered call options and expiration ideas, visit the WAL Stock Options page on StockOptionsChannel.com.
Current Market Sentiment
During mid-afternoon trading on Tuesday, the put volume among S&P 500 components was recorded at 1.14 million contracts, while call volume reached 2.23 million contracts, resulting in a put:call ratio of 0.51. This figure reflects a notably high call volume compared to puts, indicating that traders are favoring calls in today’s options market.
Discover which 15 call and put options are currently trending among traders.
Top YieldBoost Calls of the S&P 500 »
Also see:
- Auto Dealerships Dividend Stocks
- IFF Split History
- IVOV Options Chain
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
