Shareholders of UWM Holdings Corp (NASDAQ: UWMC) can enhance their income potential by selling covered calls at the $5 strike price, expiring in January 2028. At a current stock price of $3.15, the options trade could yield an additional 8.5% on top of the existing 12.7% annualized dividend, resulting in a total potential return of 21.1% if the options are not exercised. However, shareholders will forfeit upside beyond $5 if the stock appreciates by 55.8% and the call option is exercised, which would still provide a total return of 69.8% including dividends received prior to the sale.
As of Tuesday afternoon, the put volume for S&P 500 components was recorded at 2.99 million contracts, while call volume stood at 6.38 million, resulting in a put-call ratio of 0.47. This indicates a strong preference for call options among traders, significantly below the long-term median ratio of 0.65.
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