Enhancing Income with Owens Corning: A Look at Call Options

Maximizing Returns through Covered Calls

Shareholders of Owens Corning (Symbol: OC) interested in increasing their income beyond the stock’s current 1.3% annual dividend yield might consider selling a covered call option with a strike price of $200, set to expire in May 2025. By doing so, they could collect a premium of $12.50, which translates to an additional 12.2% annual return based on the stock’s current price. This strategy, known as YieldBoost at Stock Options Channel, could yield a total annualized return of 13.5%, assuming the stock is not called away.

If OC shares rise above $200, any gains beyond that would be forfeited when the stock is called away. However, this scenario requires the stock to increase by 8.2% from its current level. Should this happen, investors would still see a solid return of 14.9% from this trading position, plus any dividends received before the call.

Predicting dividend amounts can be challenging, as they often fluctuate with the company’s profitability. Looking at the dividend history chart for Owens Corning below can provide insight into the likelihood of maintaining the recent dividend yield of 1.3%.

Understanding Trading Risks and Rewards

Below is a chart displaying OC’s trailing twelve-month trading history, highlighting the $200 strike in red:

This chart, coupled with the stock’s historical volatility, can aid in determining whether selling the covered call option at the $200 strike compensates adequately for the risk of capping upside potential. The trailing twelve-month volatility for Owens Corning, assessed from the last 251 trading days along with today’s price of $183.81, stands at 30%. For more options strategies with different expiration dates, investors can check the OC Stock Options page at StockOptionsChannel.com.

Market Activity Insights

In mid-afternoon trading on Friday, the volume of put options among S&P 500 constituents totaled 1.25 million contracts, while call options reached 2.56 million, resulting in a put:call ratio of 0.49. This reflects a substantial preference for calls compared to puts, especially when contrasted with the long-term median ratio of 0.65.

Discover the most discussed call and put options in today’s trading environment.

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Also see:

• Funds Holding VZLA
• Funds Holding BJZ
• ROKU Average Annual Return

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