Shareholders of Buckle, Inc. (BKE - Get Report) looking to boost their income beyond the stock's 1.9% annualized dividend yield can sell the September covered call at the $50 strike and collect the premium based on the $2.45 bid, which annualizes to an additional 10.1% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12% annualized rate in the scenario where the stock is not called away. Any upside above $50 would be lost if the stock rises there and is called away, but BKE shares would have to climb 3.7% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 8.8% 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 Buckle, Inc. , looking at the dividend history chart for BKE 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 1.9% annualized dividend yield. Below is a chart showing BKE's trailing twelve month trading history, with the $50 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 September covered call at the $50 strike gives good reward for the risk of having given away the upside beyond $50. ( Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for Buckle, Inc. (considering the last 252 trading day closing values as well as today's price of $48.04) to be 26%. For other call options contract ideas at the various different available expirations, visit the BKE Stock Options page of StockOptionsChannel.com.
More from Stocks
Dow Futures Slide After Caterpillar Earnings, Global Stocks Sputter on Tech Woes
U.S. equity futures sputtered Wednesday, while global stocks struggled to find direction amid increasing political uncertainty in Europe, increasing concern for the health of the global tech sector and a heavy slate of corporate earnings in the Untied States.
Hong Kong Kills Bill, and Beijing May End Leader Lam's Tenure
Asia's "World City" has taken two steps forward today on the political front. But what about that world-record car-park space?
Texas Instruments, Boeing, Nike, Snap and Microsoft - 5 Things You Must Know
U.S. stock futures are mixed Wednesday and the global chip sector slumps following a revenue warning from Texas Instruments; Boeing, Caterpillar, Microsoft and Tesla to report earnings; Boeing's head of commercial airlines will leave the aerospace giant amid the 737 MAX crisis; Nike CEO Mark Parker to step down.