Leveraging Options to Boost Returns
eXp World Holdings Inc (Symbol: EXPI) investors eyeing opportunities to enhance their earnings beyond the stock’s 2.1% annualized dividend yield can consider selling the January 2025 covered call at the $12.50 strike. By capitalizing on the $1.45 bid premium, investors can secure an additional 18.2% rate of return against the current stock price, a strategy we refer to as the YieldBoost. This translates into a robust 20.3% annualized rate, assuming the stock is not called away.
If the stock rises above $12.50 and is called away, investors risk missing out on further gains. However, for this scenario to materialize, EXPI shares would need to surge by 31.4% from present levels. In the event of a stock call, shareholders would still have pocketed a significant 46.7% return from this trading level, in addition to any dividends garnered prior to the call.
Evaluating Dividend Stability
Dividend amounts can be unpredictable, ebbing and flowing in tandem with a company’s profitability. For eXp World Holdings Inc, assessing the dividend history chart for EXPI can offer insights into the likelihood of the recent dividend persisting, which, in turn, can help gauge the sustainability of the 2.1% annualized dividend yield.
Analyzing Options with Historical Data
Examining EXPI’s trailing twelve-month trading history provides a valuable perspective, particularly with the $12.50 strike highlighted in red for reference. Combining this data with the stock’s historical volatility enables investors to make informed decisions based on both technical and fundamental analysis, weighing the potential rewards against the risks of capping gains beyond $12.50.
We calculate the trailing twelve-month volatility for eXp World Holdings Inc at 61%, considering the last 250 trading day closing values alongside the current price of $9.53. For additional call options contract ideas at different expirations, investors can explore the EXPI Stock Options page on StockOptionsChannel.com.
Market Trends and Investor Sentiment
As of mid-afternoon trading on Monday, S&P 500 components witnessed a notable put volume of 652,566 contracts, with call volume reaching 1.38M. This puts the put:call ratio at 0.47 for the day, indicating a preference for calls in options trading. Compared to the long-term median put:call ratio of .65, the current scenario portrays heightened call volume relative to puts, suggesting a bullish sentiment among buyers in today’s market activity.
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The views and opinions expressed herein are solely those of the author and may not reflect the views of Nasdaq, Inc.
