Shareholders of Shoe Carnival, Inc. (Image: SCVL) trying to increase their earnings past the inventory’s 1.3% annualized dividend yield can promote the March 2025 lined name on the $50 strike and accumulate the premium primarily based on the $2.30 bid, which annualizes to an extra 12% fee of return towards the present inventory value (at Inventory Choices Channel we name this the YieldBoost), for a complete of 13.3% annualized fee within the situation the place the inventory will not be referred to as away. Any upside above $50 can be misplaced if the inventory rises there and known as away, however SCVL shares must advance 21.4% from present ranges for that to happen, that means that within the situation the place the inventory known as, the shareholder has earned a 27% return from this buying and selling stage, along with any dividends collected earlier than the inventory was referred to as.
Usually, dividend quantities are usually not all the time predictable and have a tendency to observe the ups and downs of profitability at every firm. Within the case of Shoe Carnival, Inc., wanting on the dividend historical past chart for SCVL beneath may also help in judging whether or not the newest dividend is prone to proceed, and in flip whether or not it’s a affordable expectation to anticipate a 1.3% annualized dividend yield.
Beneath is a chart displaying SCVL’s trailing twelve month buying and selling historical past, with the $50 strike highlighted in purple:
The chart above, and the inventory’s historic volatility, is usually a useful information together with elementary evaluation to evaluate whether or not promoting the March 2025 lined name on the $50 strike offers good reward for the chance of getting given away the upside past $50. (Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for Shoe Carnival, Inc. (contemplating the final 251 buying and selling day closing values in addition to right now’s value of $41.19) to be 41%. For different name choices contract concepts on the varied completely different out there expirations, go to the SCVL Stock Options web page of StockOptionsChannel.com.
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
