Maximize Your Income: Newmark Group’s Covered Call Strategy

Shareholders of Newmark Group Inc (Symbol: NMRK) seeking to increase their income beyond the current stock’s 0.8% annual dividend yield have a promising option. By selling a covered call for March 2025 at a $17.50 strike price, investors can collect a premium based on the 80 cents bid. This translates to an annualized additional return of 12.3% based on the current stock price. When combined with the existing dividend, this could yield a total annualized return of 13.1% if the stock is not called away.

If NMRK shares surpass $17.50, investors would forfeit any upside, but the shares would need to increase by 15.7% from their current value for that to happen. In that scenario, the shareholder could still achieve a total return of 20.9%, factoring in any dividends received before the stock is called.

Understanding Dividend Trends

Dividends can fluctuate based on a company’s profitability. For Newmark Group Inc, examining the dividend history can provide insight into whether the recent yield of 0.8% is sustainable.

Trading Insights

The chart below displays NMRK’s trading history over the past twelve months, with the $17.50 strike price marked:

By analyzing the stock’s historical volatility alongside fundamental metrics, investors can determine if the risk of selling the March 2025 covered call at the $17.50 strike offers adequate rewards. The trailing twelve-month volatility for Newmark Group Inc is calculated at 41%, based on the last 251 trading day’s closing prices and the current value of $15.12. For more options contracts and expiration dates, visit the NMRK Stock Options page at StockOptionsChannel.com.

Current Options Trading Activity

In mid-afternoon trading on Tuesday, the put volume among S&P 500 stocks reached 824,765 contracts compared to 1.76 million in call options, resulting in a put:call ratio of 0.47 for the day. This figure is significantly lower than the long-term median put:call ratio of 0.65, indicating a strong preference for call options among traders today.

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