Shareholders of Sabra Health Care REIT Inc (SBRA) can enhance their income by selling July covered calls at a $20 strike, which yields an additional 32.9% return annualized. This boosts the overall annualized return to 39.4% if the stock remains uncalled. Currently, SBRA’s stock price is $18.43.
For the stock to be called away, it needs to rise 8.3% from its current level. In this scenario, shareholders would earn an 8.5% return on the trade, plus any dividends collected before the stock is called.
As of Tuesday’s mid-afternoon trading, S&P 500 saw put volume at 989,342 contracts and call volume at 2.30 million, creating a put:call ratio of 0.43, indicating high call volume relative to puts.
