Shareholders of NOV Inc (Image: NOV) trying to enhance their revenue past the inventory’s 2.5% annualized dividend yield can promote the November coated name on the $13 strike and accumulate the premium primarily based on the $1.20 bid, which annualizes to an extra 16.7% fee of return towards the present inventory value (at Inventory Choices Channel we name this the YieldBoost), for a complete of 19.1% annualized fee within the situation the place the inventory will not be referred to as away. Any upside above $13 could be misplaced if the inventory rises there and known as away, however NOV shares must advance 8.8% from present ranges for that to occur, that means that within the situation the place the inventory known as, the shareholder has earned a 18.8% return from this buying and selling stage, along with any dividends collected earlier than the inventory was referred to as.
Basically, dividend quantities are usually not at all times predictable and have a tendency to observe the ups and downs of profitability at every firm. Within the case of NOV Inc, trying on the dividend historical past chart for NOV under may help in judging whether or not the latest dividend is more likely to proceed, and in flip whether or not it’s a cheap expectation to count on a 2.5% annualized dividend yield.
Under is a chart exhibiting NOV’s trailing twelve month buying and selling historical past, with the $13 strike highlighted in crimson:
The chart above, and the inventory’s historic volatility, is usually a useful information together with elementary evaluation to guage whether or not promoting the November coated name on the $13 strike provides good reward for the danger of getting given away the upside past $13. (Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for NOV Inc (contemplating the final 251 buying and selling day closing values in addition to at the moment’s value of $12.06) to be 41%. For different name choices contract concepts on the varied totally different out there expirations, go to the NOV Stock Options web page of StockOptionsChannel.com.
In mid-afternoon buying and selling on Tuesday, the put quantity amongst S&P 500 elements was 713,693 contracts, with name quantity at 1.19M, for a put:name ratio of 0.60 to this point for the day. In comparison with the long-term median put:name ratio of .65, that represents excessive name quantity relative to places; in different phrases, patrons are exhibiting a desire for calls in choices buying and selling to this point at the moment.
Find out which 15 call and put options traders are talking about today.
Top YieldBoost Calls of the S&P 500 »
Additionally see:
Canadian Stocks Going Ex-Dividend
EXK Videos
Funds Holding SIM
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
