Shareholders of Ball Corp (BLL) looking to boost their income beyond the stock's 1% annualized dividend yield can sell the August covered call at the $55 strike and collect the premium based on the 15 cents bid, which annualizes to an additional 0.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 1.6% annualized rate in the scenario where the stock is not called away. Any upside above $55 would be lost if the stock rises there and is called away, but BLL shares would have to advance 8.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 9.1% 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 Ball Corp, looking at the dividend history chart for BLL 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% annualized dividend yield. Below is a chart showing BLL's trailing twelve month trading history, with the $55 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 August covered call at the $55 strike gives good reward for the risk of having given away the upside beyond $55. ( Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for Ball Corp (considering the last 252 trading day closing values as well as today's price of $50.51) to be 16%. For other call options contract ideas at the various different available expirations, visit the BLL Stock Options page of StockOptionsChannel.com. In mid-afternoon trading on Wednesday, the put volume among S&P 500 components was 614,607 contracts, with call volume at 1.08M, for a put:call ratio of 0.57 so far for the day. Compared to the long-term median put:call ratio of .65, that represents high call volume relative to puts; in other words, buyers are showing a preference for calls in options trading so far today. Find out which 15 call and put options traders are talking about today.
More from Stocks
Walmart Faces Challenge to UK Merger Plans as CMA Questions Asda-Sainsburys Deal
Walmart struggling U.K. subsidiary could be blocked from merging with a larger rival over concerns from the country's competition watchdog that the tie-up would lead to higher prices and a "poorer experience" for shoppers in Europe's second-largest market.
Stocks Mixed as Trump Hints at China Talks Extension; Fed Minutes Loom For Doves
Global stocks traded cautiously higher again Wednesday, with markets in Asia touching fresh four-month highs, amid increasing signs of tangible progress in U.S.-China trade talks and a suggestion from President Donald Trump that negotiations could be extended if the two sides fail to reach an agreement by the first of next month.
ICYMI: U.S. China Trade Deal Could Be Huge For Chip Stocks, WMT E-commerce Surge
Nvidia, AMD and Intel could be beneficiaries of a trade deal between the world's two largest economies.
Is Honda's Plant Closure a Warning Sign for the Economy?
Honda is axing production in Britain, adding to the list of automakers undergoing a restructuring. Does this raise a red flag?