Shareholders of Xcel Energy Inc (XEL) can enhance their income potential by selling a covered call option at the $70 strike, with a premium of $3.10. This strategy could yield an additional 10.1%, resulting in a combined annualized return of 13.4% if the stock is not called away, based on the current stock price of $68.06. The stock would need to rise 3% to be called away, granting a 7.5% return plus any dividends prior to being called.
Xcel Energy’s dividend yield stands at 3.4%. The company’s historical trading volatility over the last twelve months is calculated at 21%, offering investors insights into the risk-reward dynamics of this covered call strategy. For the December expiration, the analysis suggests good potential for additional income while considering the risk of capping upside gains beyond the $70 strike.
