Maximizing Returns: Exploring Covered Calls with Nike
Shareholders of Nike (Symbol: NKE) seeking to increase their income beyond the stock’s annualized dividend yield of 2.1% should consider selling the January 2027 covered call at the $95 strike price. By doing this, they can collect a premium at an $8.70 bid, resulting in an additional annualized return of 5.5%. This strategy leads to a total projected rate of return of 7.6%, assuming the stock does not reach the call price. However, any price increase beyond $95 would mean losing the upside, which requires NKE to rise 23.8% from its current level. In such a case, shareholders would still enjoy a total return of 35.1%, factoring in dividends received before the stock is called.
Dividends can be unpredictable and typically reflect a company’s profitability fluctuations. Analyzing Nike’s dividend history chart below is useful for assessing the likelihood that the most recent dividend will continue, and whether the 2.1% yield is reasonable.
Historical Trading Insights for NKE
The chart below illustrates NKE’s trailing twelve-month trading history, with the $95 strike price indicated in red:
The above chart, together with an examination of the stock’s historical volatility, can be beneficial when analyzing whether selling the January 2027 covered call at the $95 strike price offers a suitable risk-reward ratio. After evaluating the last 251 trading days and the current price of $76.76, we find Nike’s trailing twelve-month volatility to be 34%. For more covered call options strategies for different expirations, visit the NKE Stock Options page on StockOptionsChannel.com.
Current Market Activity Trends
In afternoon trading on Tuesday, the put volume across S&P 500 stocks reached 903,272 contracts, while call volume hit 1.98 million, yielding a put-call ratio of 0.46. This figure compares to a long-term median put-call ratio of 0.65, indicating a significantly higher volume of calls relative to puts. Essentially, this trend suggests that buyers are favoring call options today.
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For Further Exploration:
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The views and opinions expressed herein are the author’s own and do not necessarily reflect those of Nasdaq, Inc.
