Shareholders of Valspar Corp. (VAL - Get Report) looking to boost their income beyond the stock's 1.5% annualized dividend yield can sell the April 2014 covered call at the $75 strike and collect the premium based on the $2.05 bid, which annualizes to an additional 7.9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.4% annualized rate in the scenario where the stock is not called away. Any upside above $75 would be lost if the stock rises there and is called away, but VAL shares would have to climb 6.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 9.3% return from this trading level, in addition to any dividends collected before the stock was called.In general, dividend amounts are not always predictable and tend to follow the ups and downs of profitability at each company. In the case of Valspar Corp., looking at the dividend history chart for VAL below can help in judging whether the most recent dividend is likely to continue, and in turn whether it is a reasonable expectation to expect a 1.5% annualized dividend yield. Below is a chart showing VAL's trailing twelve month trading history, with the $75 strike highlighted in red: The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the April 2014 covered call at the $75 strike gives good reward for the risk of having given away the upside beyond $75. ( Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for Valspar Corp. (considering the last 252 trading day closing values as well as today's price of $70.65) to be 23%. For other call options contract ideas at the various different available expirations, visit the VAL Stock Options page of StockOptionsChannel.com. In mid-afternoon trading on Friday, the put volume among S&P 500 components was 488,690 contracts, with call volume at 1.15M, for a put:call ratio of 0.43 so far for the day. Compared to the long-term median put:call ratio of .65, that represents very high call volume relative to puts; in other words, buyers are preferring calls in options trading so far today. Find out which 15 call and put options traders are talking about today.
More from Stocks
Boeing Slumps After Report Says Planemaker May Have Misled FAA on 737 MAX
Boeing shares fell the most in more than seven months Friday after a report said the Federal Aviation Administration demanded the planemaker turn over internal communications that questioned the safety of software linked to the grounded 737 MAX jet.
Tesla Reports Earnings on Wednesday: 3 Key Things to Watch For
The keys to Tesla's earnings report are all drivers of the company's ability to become consistently profitable.
Brexit: UK Prime Minister Boris Johnson Loses Key Vote to Avoid EU Exit Delay
U.K. lawmakers voted Saturday to delay approval of Prime Minister Boris Johnson's Brexit deal, setting up a potentially unprecedented clash between the country's ruling party and the Supreme Court.
Zuckerberg Set to Defend Libra on Capitol Hill Next Week. Here's What to Expect
While the hearing is focused on Facebook's Libra project, the congressional grilling could also extend to Facebook's acquisitions, antitrust concerns and posture on free speech.