Shareholders of Xcel Energy Inc (Symbol: XEL) aiming to increase their income beyond the current 3.3% annualized dividend yield have the option to sell a covered call for June at the $70 strike price. By doing so, they can collect a premium of $1.50, translating to an additional 5% return based on the current stock price. This strategy, known as YieldBoost, offers a combined total of 8.4% annualized returns if the stock remains below $70. However, if the stock advances by 6.5% and reaches $70, shareholders may miss out on any gains above that threshold. Even in this scenario, they would still achieve an 8.8% return from this trading strategy, plus any dividends received before the stock is called away.
Dividend amounts can fluctuate and are closely tied to a company’s profitability. Analyzing Xcel Energy Inc.’s dividend history can provide insight into whether the recent dividend payouts are sustainable, which may help in determining the reliability of the 3.3% annualized dividend yield.
Below is a chart showcasing the trailing twelve-month trading history of XEL, with the $70 strike marked in red:
The historical volatility of the stock, alongside the chart above, can aid investors in assessing whether selling the June covered call at the $70 strike offers a favorable risk-to-reward ratio. It’s important to note that many options do not get exercised. Currently, the trailing twelve-month volatility for Xcel Energy Inc is 22%, calculated based on the last 250 trading days and the latest price of $65.48. For further call option ideas across various expiration dates, check out the XEL Stock Options page on StockOptionsChannel.com.
During mid-afternoon trading on Monday, S&P 500 components recorded a put volume of 1.03 million contracts, while call volume reached 3.20 million, resulting in a put-to-call ratio of 0.32. This is significantly lower than the long-term median put-to-call ratio of 0.65, indicating a preference among buyers for calls in today’s options trading activity.
Explore the top YieldBoost Calls of the Nasdaq 100 »
Additional Insights:
- PYDS shares outstanding history
- GOGO Average Annual Return
- Funds Holding CNNB
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
