Maximizing Returns: Monolithic Power Systems’ Covered Call Strategy
Shareholders of Monolithic Power Systems Inc (Symbol: MPWR) can enhance their income beyond the stock’s annualized dividend yield of 0.8%. By selling a covered call for December 2025 at the $830 strike price, investors can earn a premium based on the $64.10 bid, translating to an additional annualized return of 10.3% on top of the current share price. This strategy offers a potential total annualized return of 11.2% if the shares remain uncalled. However, if the stock price surpasses $830, shareholders forfeit any additional profit above that point. Importantly, such an increase would require a significant climb of 37.4% from current levels, equating to a 48% return if the shares are ultimately called away, in addition to any dividends earned beforehand.
Typically, dividend payouts can be unpredictable and tend to fluctuate with each company’s profitability. For Monolithic Power Systems Inc., reviewing the dividend history chart for MPWR below can provide insight into whether the recent dividend is likely to continue, and whether an annualized yield of 0.8% is reasonable.
Below is a chart reflecting MPWR’s trailing twelve-month trading history, with the $830 strike marked in red:
The chart and MPWR’s historical volatility can serve as useful tools alongside fundamental analysis to determine if selling the December 2025 covered call at the $830 strike presents a favorable risk-reward balance. With a trailing twelve-month volatility of 54%, calculated from the last 250 trading days and the current price of $602.74, investors can evaluate this strategy against other call options available. For more options contract suggestions and details, visit the MPWR Stock Options page on StockOptionsChannel.com.
During mid-afternoon trading on Monday, the S&P 500 saw a put volume of 1.05 million contracts versus call volume of 2.09 million, resulting in a put:call ratio of 0.50 for the day. This contrasts with the long-term median ratio of 0.65, indicating a higher preference for call options among buyers in today’s trading environment.
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Also see:
- Institutional Holders of MEDP
- MLYS Insider Buying
- CWEN Options Chain
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
