Enhancing Your Income with Perella Weinberg Partners: A Look at Covered Calls

Maximizing Returns Beyond Dividends

Shareholders of Perella Weinberg Partners (Symbol: PWP) seeking greater income than the stock’s 1.1% annual dividend yield might consider selling a covered call with a July 2025 expiration at the $30 strike price. At a premium of $1.50, this strategy could yield an impressive additional 9% annual return based on the current stock price. If the stock isn’t called away, this leads to a combined annualized rate of 10.1%. However, if the stock surpasses the $30 mark, the upside potential would be forfeited. This would only occur if PWP shares rise by 18.9%, which would mean shareholders would enjoy a total return of 24.9%, alongside any dividends received prior to the call.

Dividend Reliability and Historical Context

It’s important to note that dividends can fluctuate significantly based on a company’s profitability. Reviewing the historical dividend data for Perella Weinberg Partners is crucial in evaluating whether the latest 1.1% yield is sustainable in the future.

Assessing Trading Performance

The chart below illustrates PWP’s trading history over the past year, with the $30 strike price clearly marked in red.

Understanding the stock’s historical volatility can assist investors in determining whether selling a covered call at the $30 strike price is worthwhile. Assessing historical performance alongside fundamental analysis provides insight into the risks of capping upside potential. Currently, PWP’s trailing twelve-month volatility stands at 39%, calculated based on the last 251 trading days and today’s price of $25.35. For further options strategies with various expiration dates, visit the PWP Stock Options page on StockOptionsChannel.com.

Current Market Sentiment

In the latest trading session on Tuesday afternoon, S&P 500 components recorded put volume at 888,080 contracts and call volume at 1.54 million, resulting in a put:call ratio of 0.58. This is considerably lower than the long-term median ratio of 0.65, indicating a shift in investor preference towards call options.

Find out which 15 call and put options traders are discussing today.

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