Investors in BGC Group Can Enhance Returns with Options

Shareholders of BGC Group Inc – Class A (Symbol: BGC) seeking to increase their income beyond the stock’s annualized dividend yield of 0.9% can consider selling the August covered call at the $10 strike. By doing so, investors can collect a premium based on the 60 cents bid. This strategy annualizes to an additional return of 23.9%, bringing the total annualized rate to 24.7% if the stock is not called away. In this scenario, any price appreciation above $10 would be forfeited, which requires BGC shares to rise 8.9% from current levels for the stock to be called away. Even in that case, shareholders would earn a total return of 15.5% based on today’s trading level, in addition to any dividends accrued prior to the call.

Dividend payouts can vary and are often tied to a company’s profitability. To gain insight into BGC Group Inc – Class A’s dividend sustainability, reviewing the company’s dividend history can provide valuable context in evaluating the likelihood of maintaining the current 0.9% annualized yield.

A chart depicting BGC’s trading history over the past twelve months, with the $10 strike price highlighted, follows:

This chart, combined with BGC’s historical volatility, supports a thorough analysis of whether selling the August covered call at $10 strikes a favorable balance between risk and reward. Research indicates that BGC Group Inc – Class A has a trailing twelve-month volatility of 36%, calculated from the last 250 trading days’ closing prices alongside today’s price of $9.19. For additional call options contract ideas at various expirations, refer to the BGC Options page.

As of mid-afternoon trading on Wednesday, the put volume among S&P 500 components stood at 595,395 contracts, while call volume reached 1.04 million contracts, resulting in a put-to-call ratio of 0.57 for the day. This ratio indicates a preference for call options, as it is significantly lower than the long-term median put-to-call ratio of 0.65.

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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.