Covered Calls on Men’s Wearhouse (MW)
First up is Men’s Wearhouse (MW). The stock has shown some volatility lately because of its buyout of Jos. A. Bank Clothiers (JOSB). In fact, because the latter repeatedly spurned offers from the former, there has been a lot of volatility in both stocks.
Now, the buyout has been accepted, yet some believe shareholders will vote it down while others believe a competing bid might show up.
MW stock trades at $52.74 as of this writing. The April 55 calls are going for $1.15. So if it gets called away, you make $2.26 on the difference between the current price and the strike, plus another $1.15, for $3.41 total (minus transactions). If not called away, you still pick up the $1.15. So sell four of these for $460 in guaranteed premium.