Maximize Income: Kite Realty Group Trust Options Strategy

Shareholders of Kite Realty Group Trust (Symbol: KRG) might consider enhancing their income beyond the current stock‘s annualized dividend yield of 5.2%. One effective approach is to sell an April covered call at the $25 strike and secure a premium based on the bid of 5 cents. This strategy projects an additional annualized return of 29.5% compared to KRG’s current stock price, leading to a potential total annualized return of 34.7% if the stock remains uncalled. However, if the stock price surpasses $25, that upside would be forfeited. For the stock to be called, KRG shares would need to increase by 21.1%, resulting in a 21.3% return from this trading level, along with any dividends collected prior to the call.

Assessing Dividend Stability

It is crucial to recognize that dividend payments can be unpredictable and often fluctuate with a company’s profitability. In the case of Kite Realty Group Trust, reviewing the dividend history chart below can provide insight into whether the recent dividend is sustainable and whether a 5.2% annualized yield is a reasonable expectation.

Current Trading Insights

The chart below illustrates KRG’s trailing twelve-month trading history, highlighting the $25 strike in red:

Utilizing the chart alongside historical volatility can aid in determining whether selling the April covered call at the $25 strike presents an attractive risk-reward scenario. Traditionally, most options tend to expire worthless, but understanding this alongside factual data is essential. For Kite Realty Group Trust, we computed a trailing twelve-month volatility of 24%, based on the last 250 trading day’s closing prices and the current price of $20.60. To explore other call option contract opportunities across various expirations, visit the KRG Stock Options page on StockOptionsChannel.com.

Market Trends in Options Trading

On Monday afternoon, put volume among S&P 500 components reached 997,586 contracts, while call volume stood at 1.70 million, yielding a put-to-call ratio of 0.59 for the day. This figure shows a higher prevalence of call purchases relative to puts when compared to the long-term median put-to-call ratio of 0.65. Therefore, it indicates a stronger preference for calls in the current options trading climate.

For further insights, you can find which 15 call and put options traders are currently highlighting.

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Also see:

• Funds Holding RLOG
• EOLS Average Annual Return
• Funds Holding EWI

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