Citizens Financial Group Offers Attractive YieldBoost Options

A report indicates that Citizens Financial Group Inc (CFG) offers a significant opportunity for shareholders to enhance income through covered calls, presenting a potential total annualized return of 12.4%, in addition to its 3.6% dividend yield.

Date: 13-11-2024

AI Rating: 7

The report highlights an investment strategy for Citizens Financial Group Inc (CFG) shareholders, focusing on the sale of covered calls to amplify income. The potential to gain an extra 8.8% from selling a January 2026 call at a $50 strike enhances the attractiveness of holding CFG shares. When factoring in the current annualized dividend yield of 3.6%, total returns could reach 12.4% if the shares are not called away.

Should the stock price increase and shares are called at $50, shareholders stand to earn a significant 16% return from the current trading level, alongside any dividends received leading up to that point. This strategy could notably appeal to income-focused investors.

Nevertheless, dividends are contingent on profitability, which may fluctuate. The report suggests reviewing CFG's historical dividend payments as a gauge for future consistency, tying it to the company's performance in sustaining the 3.6% yield.

Additionally, the report mentions the trailing twelve-month volatility of CFG shares at 32%. Analyzing the historical volatility in conjunction with this options strategy can assist in evaluating the risk-return profile for this investment.

The options market sentiment is also significant, with a call volume of 1.65M against a put volume of 821,671 for S&P 500 components, signifying a strong preference for bullish positions among traders. This dynamic might continue to influence CFG's stock price positively.

Stocks: CFG