YieldBoost Washington Real Estate Investment Trust from 2.8% to 40.5% using options


SWashington Real Estate Investment Trust (ticker: WRE) shareholders looking to increase their income beyond the stock’s 2.8% annualized dividend yield may sell the August Covered Call at 25 $ and collect the premium based on the 5-cent offer, which cancels out at an additional 37.7% rate of return over the current share price (at Stock Options Channel we call this the YieldBoost), for a total of 40.5% annualized rate in the scenario where the stock is not called. Any rise above $ 25 would be forfeited if the stock went up there and called, but WRE stocks would have to climb 3.2% from current levels for that to happen, which means in the scenario where the share is called, the shareholder earned a 3.4% return from that trading level, in addition to any dividends received before the share redemption.

In general, dividend amounts are not always predictable and tend to follow the ups and downs in each company’s profitability. In the case of Washington Real Estate Investment Trust, examining the dividend history chart for WRE below can help judge whether the most recent dividend is likely to continue, and in turn whether it is. reasonable to expect an annualized dividend yield of 2.8%. .

Below is a chart showing WRE’s trading history over the past twelve months, with the $ 25 strike highlighted in red:

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The chart above, and the share’s historical volatility, can be a useful guide in combination with fundamental analysis to judge whether the August covered call put at the $ 25 strike price is judged. offers a good reward for the risk of dropping the hike beyond $ 25. (Do most options expire worthless? This and six other common option myths debunked). We calculate the last twelve months volatility for the Washington Real Estate Investment Trust (taking into account the closing values ​​of the last 252 trading days as well as the current price of $ 24.36) to be 34%. For other ideas for call option contracts with different expirations available, visit the WRE Stock Options page of StockOptionsChannel.com.

As of mid-afternoon on Wednesday, the sales volume among S&P 500 components was 1.97 million contracts, with call volume of 3.78 million, for a put: call ratio of 0, 52 so far for the day. Compared to the long-term median put: call ratio of 0.65, this represents a very high call volume compared to puts; in other words, buyers so far prefer options trading options. Find out what 15 buy and sell options traders are talking about today.

Top REITs Yield Calls ”

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

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