Vestis Corp Offers Strong YieldBoost Potential at $17.50

Investors in Vestis Corp can achieve a total annualized return of 25.8% by selling covered calls at $17.50. The stock's high historical volatility at 73% makes options trading attractive despite some downside risk.

Date: 07-01-2025

AI Rating: 7

Dividend Yield and Covered Call Strategy: Vestis Corp (VSTS) presents an intriguing opportunity for shareholders aiming to enhance their income. The current annualized dividend yield is 0.8%, a figure that is subject to the company's profitability fluctuations. To increase potential returns, shareholders can sell February covered calls at a $17.50 strike price, allowing them to collect a premium of 50 cents. This would create an annualized YieldBoost of 24.9%, leading to a total potential return of 25.8% if the stock price remains stable.

The analysis indicates that shareholders need to consider that any price increase above $17.50 would result in the shares being called away, capping their upside. However, even if this happens, shareholders could achieve a 10.6% return from their current trading level alongside dividends collected before the stock is called.

Volatility and Market Trends: Furthermore, Vestis Corp's stock has been characterized by a trailing twelve month volatility of 73%, which denotes a relatively high level of price fluctuation. This volatility could influence potential options trading strategies. The trading volume on a recent Tuesday showed 1.08 million put contracts compared to 2.62 million call contracts, indicating a preference for call options among investors, with a put:call ratio of 0.41. This is significantly lower than the long-term median ratio of 0.65, demonstrating a bullish outlook by traders.

Stocks: VSTS