Shareholders of Live Oak Bancshares Inc (Symbol: LOB) have a strategic opportunity to enhance their income. By selling a covered call for June 2025 at the $50 strike price, investors can earn a premium of $3.90. This translates to an impressive annualized yield of 14.7% based on the current stock price, partnering with the existing 0.3% annual dividend yield for a total of 15% annualized return, provided the shares are not called away. However, if the stock rises above $50, shareholders would forfeit any gains beyond that price. Investors should note that LOB would need to increase by 9.5% for this situation to arise, where the total return would reach 18%, factoring in prior dividend payments.
Generally speaking, dividends can fluctuate based on a company’s profitability. In the case of Live Oak Bancshares, analyzing the dividend history below enables investors to assess the likelihood of maintaining the current 0.3% annual dividend yield in the future.
Additionally, the chart below illustrates LOB’s performance over the past year, highlighting the $50 strike mark in red:
The visual data alongside the stock’s historical volatility can serve as a valuable resource for determining whether selling the June 2025 covered call at the $50 strike price justifies the potential risks of capping future gains. Currently, LOB’s trailing twelve-month volatility stands at 47%, calculated from the past 251 trading days through today’s price of $45.50. For further options strategies across different expiration dates, please refer to the LOB Stock Options page on StockOptionsChannel.com.
As of mid-afternoon on Wednesday, S&P 500 options trading saw significant activity, with put volume reaching 907,833 contracts, while call volume totaled 1.54 million, yielding a put:call ratio of 0.59. This figure represents a markedly higher call volume relative to puts, showcasing a clear preference among traders for call options today.
For insights on trending call and put options, take a look at what traders are discussing today.
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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
