Shareholders of Kontoor Brands Inc (Symbol: KTB) seeking to enhance their income beyond the stock’s current 2.5% annualized dividend yield have an interesting opportunity. By selling the June 2026 covered call at the $95 strike price, investors can collect a premium based on the $7.30 bid. This strategy offers an impressive annualized return of 12.8% against the current stock price, a concept we refer to as YieldBoost. When combined with the existing dividend yield, this could result in a total annualized rate of 15.3%, assuming the stock is not called away.
However, it’s important to note that any upside beyond $95 would be forfeited if the stock price rises and the shares are called away. For this to happen, KTB shares would need to increase by 11.8% from their current levels. In the event that the stock is called, shareholders would still benefit from a 20.4% return from this trading level, in addition to any dividends collected prior to the call.
Dividend amounts can be unpredictable, often fluctuating with the company’s profitability. To assess whether Kontoor Brands Inc’s recent dividend is likely to continue, examining the dividend history chart for KTB can provide valuable insights. This analysis helps determine if a 2.5% annualized dividend yield is a reasonable expectation.
Additionally, the chart below illustrates KTB’s trailing twelve-month trading history, with the $95 strike price highlighted in red:
The information from the chart, along with the stock’s historical volatility, can serve as a useful guide. When combined with fundamental analysis, it helps evaluate whether selling the June 2026 covered call at the $95 strike offers a favorable reward for the risk of capping potential upside. (Do most options expire worthless? This and six other common options myths debunked). The trailing twelve-month volatility for Kontoor Brands Inc, calculated using the last 250 trading day closing values along with today’s price of $84.10, stands at 47%. For additional call options contract ideas across various expirations, visit the KTB Stock Options page on StockOptionsChannel.com.
In mid-afternoon trading on Friday, the put volume among S&P 500 components reached 976,564 contracts, while call volume was at 1.62 million, resulting in a put:call ratio of 0.60 for the day. This figure indicates a higher preference for calls compared to puts, especially when compared to the long-term median put:call ratio of 0.65. In essence, buyers are favoring calls in options trading today. Find out which 15 call and put options traders are discussing today.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
