Exploring Covered Calls for Enhanced Earnings
For shareholders of CONSOL Energy Inc (Symbol: CEIX), the current annual dividend yield stands at 0.9%. To potentially increase this income, investors can consider selling a covered call option with a $125 strike price expiring in December. By doing so, they can collect an $8.10 premium, which translates to an annualized return of 7.8% based on the current stock price. This approach, referred to as the YieldBoost, could lead to an overall annualized return of 8.8% if the stock remains under $125.
It’s important to note that if CEIX shares rise above $125, the upside beyond this level would be forfeited. However, a significant price increase of 16% from current levels is necessary for this outcome. Should the stock be called, the investor would still have earned a total return of 23.6%, factoring in any dividends received before the call.
Understanding the Dividend Landscape
Dividend payments can fluctuate, often reflecting a company’s profitability. To assess the stability of CONSOL Energy Inc’s dividend, it’s wise to review its historical dividend performance. The chart below illustrates CEIX’s dividend history, offering insight into whether the company’s latest dividend can be sustained, thus validating the expectation of a 0.9% annualized yield.
Charting CEIX Performance
The following chart displays CEIX’s trading activity over the past twelve months, with the $125 strike visibly marked in red:
Reviewing this chart along with the stock’s historical volatility is crucial for assessing whether selling a covered call at the $125 strike offers sufficient reward given the potential risks of capping profits. The trailing twelve-month volatility for CONSOL Energy Inc, calculated based on the last 251 trading days and the current stock price of $106.66, stands at 40%. For further options trading opportunities, visit the CEIX Stock Options page at StockOptionsChannel.com.
Market Activity Snapshot
During mid-afternoon trading on Friday, the S&P 500 saw a put volume of 1.21 million contracts against a call volume of 2.67 million, resulting in a put:call ratio of 0.45. This indicates a notably high call volume relative to puts compared to the long-term median ratio of 0.65, suggesting that traders are favoring calls in the current options market.
Discover the top 15 call and put options that traders are currently discussing today.
Top YieldBoost Calls of Stocks Conducting Buybacks »
Also see:
- Ventas DMA
- TBIL Videos
- Top Ten Hedge Funds Holding GBTG
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
