Analysis of Covered Call Options for BN Stock
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Source: NASDAQ.COM
- Covered Call Returns: Investors purchasing BN stock at the current price of $43.68 and selling a covered call at a $44.00 strike price could achieve a total return of 1.42% by the September 18 expiration, although they may miss out on higher upside potential.
- Expiration Risk: The $44.00 strike represents a 1% premium to the current trading price, indicating a 47% chance that the option will expire worthless, allowing investors to retain both their shares and the premium collected.
- Additional Return Potential: If the covered call expires worthless, investors could realize a 0.69% boost in returns, annualized at 3.39%, referred to as YieldBoost, enhancing the investment's appeal.
- Volatility Analysis: The implied volatility of the call option is 31%, while the actual trailing twelve-month volatility, based on the last 250 trading days, is 28%, highlighting a discrepancy between market expectations and historical performance.
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Analyst Views on BN
Wall Street analysts forecast BN stock price to rise
8 Analyst Rating
8 Buy
0 Hold
0 Sell
Strong Buy
Current: 43.960
Low
36.00
Averages
49.91
High
59.00
Current: 43.960
Low
36.00
Averages
49.91
High
59.00
About BN
Brookfield Corporation is a Canada-based global investment firm focused on building long-term wealth for institutions and individuals around the world. The Company has three core businesses: Alternative Asset Management, Wealth Solutions, and its Operating Businesses, which are in renewable power, infrastructure, business and industrial services, and real estate. Its Asset Management business includes managing long-term private funds, perpetual strategies and liquid strategies on behalf of its investors and itself. The Company's Wealth Solutions business includes its equity accounted interest in Brookfield Wealth Solutions Ltd. Its renewable power and transition business includes the ownership, operation and development of hydroelectric, wind, utility-scale solar power generating assets, distributed energy, and sustainable solutions. The Company’s infrastructure business includes the ownership, operation and development of utilities, transport, midstream, and data assets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Expiration Risk: The $44.00 strike represents a 1% premium to the current trading price, indicating a 47% chance that the option will expire worthless, allowing investors to retain both their shares and the premium collected.
- Additional Return Potential: If the covered call expires worthless, investors could realize a 0.69% boost in returns, annualized at 3.39%, referred to as YieldBoost, enhancing the investment's appeal.
- Volatility Analysis: The implied volatility of the call option is 31%, while the actual trailing twelve-month volatility, based on the last 250 trading days, is 28%, highlighting a discrepancy between market expectations and historical performance.
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- Covered Call Returns: Investors purchasing BN stock at the current price of $43.68 and selling a covered call at a $44.00 strike price could achieve a total return of 1.42% by the September 18 expiration, although they may miss out on higher upside potential.
- Expiration Risk: The $44.00 strike represents a 1% premium to the current trading price, indicating a 47% chance that the option will expire worthless, allowing investors to retain both their shares and the premium collected.
- Additional Return Potential: If the covered call expires worthless, investors could realize a 0.69% boost in returns, annualized at 3.39%, referred to as YieldBoost, enhancing the investment's appeal.
- Volatility Analysis: The implied volatility of the call option is 31%, while the actual trailing twelve-month volatility, based on the last 250 trading days, is 28%, highlighting a discrepancy between market expectations and historical performance.
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- Strategic Partnerships: Brookfield has built a robust private credit platform through its partnership with Oaktree, acquiring a 62% stake in 2019 and completing the purchase of the remaining shares last year, which has significantly broadened its credit business offerings.
- Asset Management Growth: The company currently manages $250 billion in private credit assets and aims to increase this to $640 billion by 2030, which is expected to drive an annual fee-based income growth of $1.5 billion, showcasing its strong market expansion capabilities.
- Investment Opportunity: Although Brookfield's shares have fallen over 10% from their 52-week high, its solid credit platform and partnerships with industry leaders present a compelling investment opportunity, with expectations for continued earnings growth.
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