Maximize Your Earnings with International Game Technology’s Covered Call Strategy

Exploring the IGT Covered Call Option

Shareholders of International Game Technology PLC (Symbol: IGT) seeking to enhance their income beyond the stock’s current 4.6% annualized dividend yield can consider selling a covered call for January 2027 at the $22 strike price. By doing this, investors can collect a premium, which at a $1.50 bid would add an annualized return of approximately 4.4% based on the current stock price. This strategy could potentially yield a total annualized rate of 8.9% if the stock is not called away. However, if IGT shares rise above $22, any upside beyond that would be forfeited. At present values, IGT would need to increase by 26.9% for the stock to reach the call price, resulting in a 35.5% total return for shareholders, including any dividends earned prior to the call.

Understanding Dividend Trends

It’s important to keep in mind that dividends can be unpredictable, fluctuating with a company’s profitability. Examining IGT’s dividend history can aid in assessing the likelihood of maintaining the recent 4.6% annual yield.

Historical Performance Analysis

The chart below illustrates IGT’s trading performance over the last twelve months, highlighting the $22 strike in red:

Given this data and the stock’s historical volatility, potential investors can better gauge whether selling the January 2027 covered call at the $22 strike represents a suitable balance of reward vs. risk if the stock exceeds that price. The trailing twelve-month volatility for International Game Technology PLC, calculated from the last 250 trading days along with the current price of $17.52, stands at 34%. For alternative call options and various expiration dates, check out the IGT Stock Options page on StockOptionsChannel.com.

Current Market Trends

During mid-afternoon trading on Wednesday, the S&P 500 saw put volume of 1.28 million contracts and call volume of 3.47 million contracts, resulting in a put-to-call ratio of 0.37 for the day. This ratio suggests significantly higher activity in call options compared to puts, indicating a strong preference for call buying among traders today.

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Also see:

• RSP Videos
• HBAN RSI
• ADUS Price Target

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