Boost Your Income with Archer Daniels Midland Co.: A Guide to Covered Calls

Maximize Returns with Strategic Options Trading

For shareholders of Archer Daniels Midland Co. (Symbol: ADM) eager to enhance their income beyond the stock’s current 3.7% annual dividend yield, consider selling a September 2025 covered call at the $60 strike. This move allows you to collect a premium of $2.75, which translates to an additional 6.3% annualized return based on the current stock price. If the stock remains below $60, shareholders could enjoy a total annualized return of 9.9%. However, should the stock price exceed $60, any potential gains beyond that point will be forfeited. It’s worth noting that ADM shares must rise by 10.7% from their present levels for this scenario to play out. Should the stock be called, shareholders would still secure a total return of 15.8%, alongside any dividends accrued prior to the call.

Understanding ADM’s Dividend History

Dividends can fluctuate based on a company’s profitability, making them less predictable. Analyzing Archer Daniels Midland’s dividend history is crucial for assessing the likelihood that the 3.7% annual yield will be maintained. The dividend history chart for ADM, presented below, can be a valuable tool in making this determination.

Assessing Stock Performance and Risk

The chart below illustrates ADM’s trailing twelve-month trading history, with the $60 strike indicated in red:

This analysis, combined with historical volatility, helps determine if the potential rewards of selling a covered call at the $60 strike justify the risks of missing out on further upside. For Archer Daniels Midland, the calculated trailing twelve-month volatility stands at 37%, based on the last 252 trading days and the current price of $54.31. For additional options strategies and expiration date choices, check out the ADM Stock Options page on StockOptionsChannel.com.

Current Market Insights

As of Wednesday afternoon, the put volume in S&P 500 components reached 1.06 million contracts, with call volume at 1.82 million. This results in a put-to-call ratio of 0.58 for the day, indicating a preference among buyers for call options in today’s trading environment. This ratio is lower than the long-term median of 0.65, reflecting strong call demand.

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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.