Shareholders of Northern Oil & Gas Inc (Symbol: NOG) have an opportunity to enhance their income beyond the stock’s impressive 7.2% annualized dividend yield. By selling a covered call for March 2026 at the $26 strike price, investors can collect a premium based on the current bid of $2.60. This strategy translates to an annualized return of 22.5% against the current stock price, a concept we refer to as YieldBoost. In this scenario, if the stock is not called away, the total annualized return could reach 29.8%.
However, it’s important to note that any upside beyond $26 would be forfeited if the stock price rises above that level and the shares are called away. Currently, NOG shares would need to increase by 4.8% for this to occur. In the event that the stock is called, shareholders would still enjoy a 15.3% return from the current trading level, in addition to any dividends accrued prior to the call.
Dividend amounts can be unpredictable, often fluctuating with the company’s profitability. To assess the likelihood of sustaining the recent dividend, examining the dividend history chart for NOG is essential. This analysis can help determine whether a 7.2% annualized dividend yield is a reasonable expectation.
Below is a chart illustrating NOG’s trailing twelve-month trading history, with the $26 strike price highlighted in red:
The above chart, along with the stock’s historical volatility, serves as a valuable tool when combined with fundamental analysis. This approach can help determine if selling the March 2026 covered call at the $26 strike offers a favorable reward-to-risk ratio, especially considering the potential loss of upside beyond that price. For further insights, you can explore common myths about options trading.
Our calculations indicate that the trailing twelve-month volatility for Northern Oil & Gas Inc, based on the last 250 trading days and the current price of $24.86, stands at 52%. For additional call option contract ideas across various expirations, visit the NOG Stock Options page on StockOptionsChannel.com.
In mid-afternoon trading on Wednesday, the put volume among S&P 500 components reached 830,744 contracts, while call volume was at 2.16 million, resulting in a put:call ratio of 0.39 for the day. This figure is significantly lower than the long-term median put:call ratio of 0.65, indicating a strong preference for calls among options traders today. To see which call and put options are trending, check out this resource.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
