Covered Call Yields with ConocoPhillips Are Attractive as COP Stock Is Near a Peak

ConocoPhillips (COP) stock is nearing a three-month high, making it an attractive option for shareholders interested in covered calls. For instance, selling the $140 call expiring on September 25 yields a 1.75% return for one month, providing a potential boost to investors' income. At present, COP is trading at $133.25, down 1% from its $134.89 peak on August 20.

This downward trend, however, has not diminished the stock's potential for generating extra income. Investors are betting on easing oil prices and the potential de-escalation of the U.S.-Iran conflict, which could lead to a reversal in COP stock's upward momentum. By selling out-of-the-money (OTM) covered calls, existing shareholders can capitalize on this upward movement while mitigating downside risks.

This strategy offers an estimated annualized return of nearly 20%, which exceeds analysts' expectations for COP stock's price target.