Income Opportunities with Group 1 Automotive’s Covered Call Strategy

Maximize Returns with July Covered Call

Shareholders of Group 1 Automotive, Inc. (Symbol: GPI) have the chance to increase their earnings beyond the stock’s current 0.4% annualized dividend yield by selling a July covered call at the $510 strike price. Investors can earn a premium with a $19.50 bid, which translates to an annualized return of 9.6% based on the current stock price. This approach, known as YieldBoost at Stock Options Channel, could result in a total annualized rate of 10% if the stock isn’t called away.

However, if the stock price exceeds $510, shareholders would forfeit any profits above this strike price. Due to the requirement of a 13.6% increase in GPI shares for this scenario, calling the stock would still yield an 18% return from this trading level, in addition to any dividends received prior to the call.

Generally, dividends can be unpredictable and often fluctuate based on a company’s profitability. Analyzing Group 1 Automotive’s dividend history can provide insight on whether the recent yield of 0.4% is sustainable.

A Look at Trading Patterns

The chart below displays GPI’s trailing twelve-month trading pattern, with the $510 strike highlighted in red:

Using both the chart and historical volatility alongside fundamental analysis may help assess whether selling the July covered call at the $510 strike presents a favorable risk-reward situation. Notably, the trailing twelve-month volatility for Group 1 Automotive, based on the last 249 trading days and today’s price of $447.82, is calculated at 30%. For additional call option strategies with varying expiration dates, visit the GPI Stock Options page on StockOptionsChannel.com.

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Also see:

• Institutional Holders of FLXT
• RHI Historical PE Ratio
• OBNK Stock Predictions

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