Shareholders of Inter Parfums, Inc. (IPAR) looking to boost their income beyond the stock's 1.8% annualized dividend yield can sell the August covered call at the $30 strike and collect the premium based on the $1.15 bid, which annualizes to an additional 8.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 9.9% annualized rate in the scenario where the stock is not called away. Any upside above $30 would be lost if the stock rises there and is called away, but IPAR shares would have to advance 11.2% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 15.4% 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 Inter Parfums, Inc., looking at the dividend history chart for IPAR 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 1.8% annualized dividend yield. Below is a chart showing IPAR's trailing twelve month trading history, with the $30 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 $30 strike gives good reward for the risk of having given away the upside beyond $30. ( Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for Inter Parfums, Inc. (considering the last 252 trading day closing values as well as today's price of $26.99) to be 31%. For other call options contract ideas at the various different available expirations, visit the IPAR Stock Options page of StockOptionsChannel.com. In mid-afternoon trading on Wednesday, the put volume among S&P 500 components was 724,621 contracts, with call volume at 1.21M, for a put:call ratio of 0.60 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.
HOST // Robert Powell
Retirement Planning Event
More from Stocks
Boeing Faces $6B 737 MAX Cancellation; Garuda Indonesia Rethinks 49-Jet Order
Boeing may lose a $6 billion order for its 737 MAX 8 after Indonesia's national airline moved to cancel or amend a previous agreement for the controversial aircraft as the fallout from two fatal crashes deepens for the world's biggest planemaker.
Europe's Economic Turmoil, Avoiding Bank Stocks. Apple's Show Time: Market Recon
Some time later on Friday it is expected that Italy will break ranks with the G-7, the EU, NATO, and sign a Belt and Road Initiative Memorandum of Understanding with China.
Dow Futures Tumble as European Factory Output Hits 2013 Low, Bunds Touch 0%
U.S. futures fell sharply Friday after a private sector reading of economic activity in Europe slumped to its weakest level in seven years, underscoring market concerns over slowing global growth, political uncertainty in Europe and flagging U.S.-China trade talks.