Newmark Group’s Covered Call Strategy Offers 13.2% Annualized Return

Shareholders of Newmark Group Inc (NMRK) seeking higher income can sell December covered calls at a $12.50 strike price. The current bid of 75 cents annualizes to an additional 12.2% return, alongside the existing 1.1% dividend yield. This strategy could yield a total of 13.2% annually if the stock isn’t called away. In the event of a price rise above $12.50, shareholders would miss out on upside gains, but the stock would need to increase by 13.3% for the call to be exercised. Thus, shareholders could achieve a 20.1% return, including any dividends prior to the call.

Predicting dividend amounts is challenging as they align with a company’s profitability. Reviewing Newmark’s dividend history can help evaluate whether the recent 1.1% yield is sustainable.

Below is a chart detailing NMRK’s trading history over the past twelve months, with the highlighted $12.50 strike:

The charts and historical volatility can guide investors in assessing whether the potential rewards of selling the covered call at $12.50 justify the risk of capping upside gains. Newmark’s trailing twelve-month volatility is calculated at 39%, based on the last 250 trading day closings and the current price of $11.00. For additional call options ideas, refer to NMRK’s options page.

During mid-afternoon trading on Thursday, S&P 500 put volume stood at 1.32 million contracts against call volume of 2.28 million, resulting in a put-call ratio of 0.58. This indicates higher call volume than the long-term median ratio of 0.65, showing a market preference for calls today.

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Additional Insights:

• NTRS MACD
• FLAC Insider Buying
• CXM Market Cap History

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