For shareholders of Archrock Inc (Symbol: AROC) seeking to enhance their income beyond the stock’s current 3.5% annualized dividend yield, an attractive strategy is to consider selling a covered call option. Specifically, the May 2026 covered call at the $30 strike price offers an opportunity to collect a premium based on the $1.15 bid. This translates to an impressive annualized return of 8.3% when measured against the current stock price. At Stock Options Channel, we refer to this as the YieldBoost. In a scenario where the stock is not called away, this could result in a total annualized return of 11.7%.
However, it’s important to note that any upside beyond the $30 strike price would be forfeited if the stock rises and is called away. For this to happen, AROC shares would need to increase by 24.6% from their current levels. In such a case, shareholders would still enjoy a substantial 29.4% return from this trading level, in addition to any dividends collected prior to the stock being called.
Dividend amounts can be unpredictable, often fluctuating with the company’s profitability. To assess the likelihood of Archrock maintaining its recent dividend, examining the dividend history chart for AROC is essential. This analysis can help determine whether the 3.5% annualized dividend yield is a reasonable expectation.
Additionally, the chart below illustrates AROC’s trailing twelve-month trading history, with the $30 strike price highlighted in red:
The combination of the chart above and the stock’s historical volatility serves as a valuable guide. This information, when paired with fundamental analysis, can help investors determine if selling the May 2026 covered call at the $30 strike offers a favorable risk-reward balance. For those curious about the fate of options, you can explore the question: Do most options expire worthless? This and six other common options myths debunked. Our calculations show that the trailing twelve-month volatility for Archrock Inc, based on the last 250 trading days and the current price of $24.32, stands at 42%. For additional call option contract ideas across various expirations, visit the AROC Stock Options page on StockOptionsChannel.com.
In mid-afternoon trading on Thursday, the put volume among S&P 500 components reached 688,107 contracts, while call volume was at 1.64 million, resulting in a put:call ratio of 0.42 for the day. This figure indicates a significantly higher call volume relative to puts, especially when compared to the long-term median put:call ratio of 0.65. Essentially, this suggests that buyers are favoring calls in options trading today. To discover which call and put options traders are discussing, check out Find out which 15 call and put options traders are talking about today.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
