Maximizing Income: OceanFirst Financial Corp Offers Attractive Strategies

Boosting Returns with Covered Calls

Shareholders of OceanFirst Financial Corp (Symbol: OCFC) can enhance their income beyond the 4% annualized dividend yield. By selling a June 2025 covered call at the $22.50 strike price, investors can collect a premium at the $1.10 bid. This trade could yield an additional 10.1% return based on the current stock price, totaling a potential 14.1% annualized rate if the stock remains uncalled. However, if the stock exceeds $22.50, gains above this level would be forfeited. Currently, OCFC shares would need to rise 11.4% for that to happen. Should the stock be called, investors would still achieve a commendable 16.8% return from this level, plus any dividends received prior to selling.

Dividend amounts are not always predictable and fluctuate with a company’s profitability. By examining the dividend history of OceanFirst Financial Corp, as shown in the chart below, investors can gauge the likelihood that the recent dividend will continue, confirming the reasonableness of a 4% annualized dividend yield.

Historical Performance Insights

Below is a chart that illustrates OCFC’s trailing twelve-month trading history, featuring the $22.50 strike price highlighted in red:

The above chart, alongside the stock’s historical volatility, provides insights when assessing the risks and rewards of selling the June 2025 covered call at the $22.50 strike price. The volatility for OceanFirst Financial Corp, based on the last 251 trading days and the current price of $20.22, is calculated at 39%. For additional call option strategies with various expiration dates, visit the OCFC Stock Options page on StockOptionsChannel.com.

Market Trends and Trading Volume

During mid-afternoon trading last Friday, put volume among S&P 500 components reached 1.02 million contracts, compared to 2.16 million contracts for calls, resulting in a put:call ratio of 0.47. This high call volume signals a preference among buyers for calls, especially against a long-term median put:call ratio of 0.65.

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The views and opinions expressed herein are those of the author and do not necessarily represent those of Nasdaq, Inc.