Strategy To YieldBoost Allied Motion Technologies To 12.6% Using Options

Shareholders of Allied Motion Technologies Inc (AMOT) looking to boost their income beyond the stock's 0.3% annualized dividend yield can sell the April 2018 covered call at the $35 strike and collect the premium based on the $1.40 bid, which annualizes to an additional 12.3% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.6% 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 AMOT shares would have to advance 8.5% from current levels for that to occur, meaning that in the scenario where the stock is called, the shareholder has earned a 12.8% return from this trading level, in addition to any dividends collected before the stock was called.

START SLIDESHOW:
Top YieldBoost Calls of the S&P 500 »

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 Allied Motion Technologies Inc, looking at the dividend history chart for AMOT 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 0.3% annualized dividend yield.

AMOT+Dividend+History+Chart

Below is a chart showing AMOT's trailing twelve month trading history, with the $35 strike highlighted in red:

Loading+chart++2017+TickerTech.com

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 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 Allied Motion Technologies Inc (considering the last 253 trading day closing values as well as today's price of $32.28) to be 42%. For other call options contract ideas at the various different available expirations, visit the AMOT Stock Options page of StockOptionsChannel.com.

In mid-afternoon trading on Tuesday, the put volume among S&P 500 components was 551,105 contracts, with call volume at 1.00M, for a put:call ratio of 0.55 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

Dow Trades Lower as Trump, Democratic Leaders Fight Over Border Security

Dow Trades Lower as Trump, Democratic Leaders Fight Over Border Security

Verizon to Take Massive Charges From Employee Buyouts, Weakness at Oath

Verizon to Take Massive Charges From Employee Buyouts, Weakness at Oath

Should You Stay Away From Tech ETFs? Why Jim Cramer Is Sticking to Stocks

Should You Stay Away From Tech ETFs? Why Jim Cramer Is Sticking to Stocks

UnitedHealth Is Signaling a Buy

UnitedHealth Is Signaling a Buy

McDonald's Sustainability Efforts Position Products for Younger Consumers

McDonald's Sustainability Efforts Position Products for Younger Consumers