JBTM

Strategy To YieldBoost JBT Marel To 17.8% Using Options

Shareholders of JBT Marel Corp (Symbol: JBTM) looking to boost their income beyond the stock's 0.3% annualized dividend yield can sell the May covered call at the $135 strike and collect the premium based on the $6.10 bid, which annualizes to an additional 17.5% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 17.8% annualized rate in the scenario where the stock is not called away. Any upside above $135 would be lost if the stock rises there and is called away, but JBTM shares would have to advance 5.8% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 10.6% 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 JBT Marel Corp, looking at the dividend history chart for JBTM 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.

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Below is a chart showing JBTM's trailing twelve month trading history, with the $135 strike highlighted in red:

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The chart above, and the stock's historical volatility, can be a helpful guide in combination with fundamental analysis to judge whether selling the May covered call at the $135 strike gives good reward for the risk of having given away the upside beyond $135. (Do most options expire worthless? This and six other common options myths debunked). We calculate the trailing twelve month volatility for JBT Marel Corp (considering the last 249 trading day closing values as well as today's price of $127.89) to be 35%. For other call options contract ideas at the various different available expirations, visit the JBTM Stock Options page of StockOptionsChannel.com.

In mid-afternoon trading on Wednesday, the put volume among S&P 500 components was 1.40M contracts, with call volume at 2.68M, for a put:call ratio of 0.52 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.

Top YieldBoost Calls of the S&P 500 »

Also see:
• APA market cap history
• Dover Historical PE Ratio
• Hilton Worldwide Holdings DMA

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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