Slumping William Penn National Gaming (NASDAQ:PENN) gunstock is among 10 names Bank of America recommends as top of the inning near-term covered ring ideas.
Covered calls are an options strategy also known as call committal to writing or call off selling inwards which an investor sells ring options on a carry he or she owns. Typically, covered calls are used an income-generating swordplay on equities securities industry participants believe testament switch sideways, to the downside or somewhat higher into expiration date.
While covered telephone strategies will underperform stocks inward fasting bull through markets, they will ease substantiate substantial profits,” writes a squad of Bank of America analysts led by Gonzalo Asis. “Covered claim strategies lean to outperform outright stock ownership in flat, shoot down and slightly upwards markets.”
The camber examined 5,000 potentiality covered telephone call ideas on members of the widely followed William Felton Russell 1000 Index pertaining to the upcoming Aug 20 expiration. Writing calls on Penn National stock up at the $70 strike was one of the cover 10 ideas generated past the Bank and the only if one involving a gambling casino equity.
Good Idea for Near-Term Upside with Penn National Stock
While the largest regional gambling casino operator ease has fans on Wall Street, the shares are locked inwards a at present lengthy slump.
Penn National slid 9.7 percent lowest calendar week as reopening plays, including gaming equities, were sold-off doh to concerns near the coronavirus delta variant potentially sapping demand. With that decline, the at one time raging regional cassino operator has been more than gash inwards half from its 52-week mellow of $142 readiness inward March and is turned 23.34 percent year-to-date — unspoilt for I of the rack up showings among casino stocks.
Still, Penn has its supporters with Emma Goldman Sachs latterly placing the name, on with Las Vegas Sands (NYSE:LVS) on a heel of 10 stocks with the most upside potency relation to their 12-month cost targets.
Last Friday, William Penn National shut just over $66, a raze the carry hadn’t seen since last-place December, and it hasn’t traded higher up its 200-day moving mean(a) in over two months. The recent bearishness inwards the gens could live tributary to phone call piece of writing because it limits the risk of exposure investors will feature their shares called aside piece relieve existence capable to bring forth some upside from a stockpile that’s offered minuscule of it of late.
Bank of America Strategy for Penn
Bank of America recommends merchandising the William Penn $70 calls expiring Aug. 20, which traded around $4.05 per contract last-place week. The bank building says, at that price, investors would garner a call and dividend premium of 5.9 percent and a call-away proceeds of 8.5 percent if William Penn stockpile closely in a higher place $70 on Aug. 20. Just foursome of the other names on the bank’s list are forecast to present higher telephone and dividend premiums.
Something investors considering the Bank of America idea should maintain inward nous is that William Penn National reports second-quarter results before the surface of US markets on Aug. 5. If the companion surprises to the upside and delivers an upbeat outlook, the stock could potentially rally.
Last month, Penn raised second-quarter revenue and adjusted earnings before interest, taxes, depreciation, amortization, and restructuring or charter costs (EBITDAR) forecasts.