Genuine Parts Co. Offers Attractive Income Through Covered Calls

Shareholders of Genuine Parts Co. (Symbol: GPC) looking to enhance their income beyond the stock’s 3.4% annualized dividend yield can consider selling the November covered call at the $130 strike. By doing so, they can collect a premium with a bid of $5.60, which annualizes to an additional 8.7% return based on the current stock price. This strategy could yield a total of 12.1% annualized if the stock remains uncalled. However, if the stock rises above $130, any additional gains will be forfeited. For this scenario to occur, GPC shares would need to increase by 6.9%, providing a shareholder with an 11.5% return from the trading level, along with any dividends collected prior to being called away.

Dividend amounts are often unpredictable and typically fluctuate with the profitability of a company. For Genuine Parts Co., reviewing the dividend history chart below can offer insights into the likelihood of maintaining the recent dividend yield.

Below is a chart showcasing GPC’s trailing twelve-month trading history, with the $130 strike highlighted in red:

This chart, along with the stock’s historical volatility, can aid in conjunction with fundamental analysis. These tools can help evaluate whether selling the November covered call at the $130 strike offers an appropriate reward for the risk of surrendering potential upside. The trailing twelve-month volatility for Genuine Parts Co., accounting for the last 249 trading days and the current price of $120.96, stands at 35%. For additional call option contract ideas across various expiration dates, shareholders may refer to the GPC options page at StockOptionsChannel.com.

During mid-afternoon trading on Monday, the put volume among S&P 500 components reached 1.32 million contracts, while call volume stood at 2.64 million, resulting in a put-to-call ratio of 0.50 for the day. This figure, notably below the long-term median put-to-call ratio of 0.65, indicates a strong preference for calls in the options trading market today.

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Additional Resources:

• Best Dividend Paying Stocks Analysts Like
• BRO Historical Stock Prices
• GVH Shares Outstanding History

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