Enhance Woodward’s Yield to 6.7% Through Strategic Options Trading

Published On: December 26, 2024 8:47 pm

Maximizing Returns: Woodward, Inc. Offers Strategic Income Options

Exploring the YieldBoost Strategy for Enhanced Investment Income

Shareholders of Woodward, Inc. (Symbol: WWD) may consider selling the October 2025 covered call at the $220 strike to enhance their income prospects beyond the stock’s 0.6% annualized dividend yield. By doing so, they can capture a premium based on the $8.40 bid, which provides an additional 6.1% return when annualized against the current stock price. In total, this could yield a 6.7% annualized return if the stock remains below the calling point. However, if WWD shares rise above $220 and are called away, the upside would be lost. Notably, the shares would need to increase by 29% from current levels for this scenario to occur, resulting in a total potential return of 33.9% from this trading level, alongside any dividends received beforehand.

Dividends are intrinsically tied to a company’s profitability and can fluctuate significantly. For Woodward, Inc., examining the dividend history chart provided below can offer insights into the likelihood of maintaining the current 0.6% yield.

WWD Dividend History Chart

Assessing Historical Performance for Informed Decisions

The following chart details WWD’s trailing twelve month trading history, with the $220 strike highlighted in red:

WWD Trading History Chart

This chart, together with the stock’s historical volatility, can help investors assess whether selling the October 2025 covered call at the $220 strike offers a favorable trade-off, considering the potential loss of upside beyond $220. Woodward, Inc. has an estimated trailing twelve month volatility of 30%, calculated using the last 251 trading days’ closing prices along with today’s price of $170.78. For additional options strategies and contract ideas at various expiration dates, visit the WWD Stock Options page at StockOptionsChannel.com.

Market Trends: A Snapshot of Options Trading Activity

During mid-afternoon trading on Thursday, the S&P 500’s put volume reached 709,347 contracts, while call volume stood at 1.43 million, resulting in a put:call ratio of 0.50 for the day. This is notably lower than the long-term median put:call ratio of 0.65, indicating a heightened preference for calls among options traders today.

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