Shareholders of Haynes International, Inc. (HAYN - Get Report) looking to boost their income beyond the stock's 2.8% annualized dividend yield can sell the June 2018 covered call at the $35 strike and collect the premium based on the $1.95 bid, which annualizes to an additional 11.7% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 14.4% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but HAYN shares would have to climb 9.4% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 15.5% 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 Haynes International, Inc., looking at the dividend history chart for HAYN 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 2.8% annualized dividend yield. Below is a chart showing HAYN's trailing twelve month trading history, with the $35 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 June 2018 covered call at the $35 strike gives good reward for the risk of having given away the upside beyond $35. ( Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for Haynes International, Inc. (considering the last 253 trading day closing values as well as today's price of $31.87) to be 36%. For other call options contract ideas at the various different available expirations, visit the HAYN Stock Options page of StockOptionsChannel.com.
More from Stocks
Softbank's Deflated Bets on WeWork and Uber Show It Needs a New Vision
The deflation of Uber and of WeWork shows that you can only go so far when you sacrifice disciplined investing to the greed that comes with easy money.
Market Movers: Negative Rates and Global Central Banks
Global negative rates, a new normal?
Dow Turns Negative as Apple Shares Slip, Trade Worries Reappear
Stocks turn mixed late Thursday as weakness in Apple offsets strong gains from Microsoft and investors pondered new trade war worries.
KKR Shares Rise After Earning Goldman's Top Rating
KKR is undervalued right now, Goldman Sachs argues as it ups its price target to $35, or roughly 20% higher than what shares of the legendary buyout firm are currently trading for.